The Family Business Association of California, an advocacy organization working on behalf of California’s family-owned businesses, issued the following statement today following the decision of Sen. Scott Wiener, D-San Francisco, to make his SB 726 a two-year bill.
“We are pleased that Sen. Wiener has delayed action on his legislation, and will continue working with our coalition partners to persuade him to drop the bill altogether,” said FBA Executive Director Robert Rivinius. “Family businesses are the bedrock of California’s economy and our communities, and imposing a California-only 40 percent death tax would be a crippling blow to many family businesses and would cause many of them to relocate to more business-friendly states.
“California’s 1.4 million family businesses employ 7 million people. They tend to pay their employees better, train them better, and provide more generous benefits than nonfamily companies. And because they are community based, they give back generously to local organizations and help keep communities stronger. But only 30 percent of family businesses survive into the second generation, just 12 percent into the third generation, and only a tiny 3 percent operate into the fourth generation and beyond. The state should be taking steps to encourage family businesses, not tax them into liquidating or relocating.”
FBA has assembled a coalition of nearly 50 business and farming organizations that recently sent a letter to Sen. Wiener outlining the many problems in the bill. FBA Vice Chair Ken Monroe also authored an op-ed that ran this week in Wiener’s hometown newspaper, the San Francisco Chronicle.
SB 726 would ask voters to overturn ballot initiatives approved in 1982 to do away with the state’s estate tax. While he says the measure would only be pursued if the federal government abolishes its 40 percent death tax, nothing in the legislation states that. The tax would generate about $4.5 billion a year for state government.