Press Releases

Ninth District Congressman Adam Smith will introduce legislation today that will exempt family-owned businesses and farms from the estate tax.

“In my two short years in Congress, I’ve already witnessed family-owned businesses, the most prominent being Frank Russell Company of Tacoma, not being passed down to the next generation because of the onerous estate tax,” Smith said. “My legislation will exempt family-owned businesses and farms from the estate tax so that they can stay in the family and survive.”

More than 70 percent of all family businesses and farms do not survive through the second generation, and 87 percent do not make it through the third generation. Smith says that the high estate tax is at least partly to blame.

“Under current law, only the first $675,000 of a decedent’s estate is exempt from estate taxes. Beyond that, the value of the estate is taxed at rate ranging from 18 to 55 percent. This is extremely burdensome to family-owned businesses and farms, because while a business or farm may hold assets greater than $675,000, rare is the company or farm that has the kind of liquid cash necessary to pay the high tax bill,” Smith explained. “Therefore, too many family farms and businesses are sold before they can be passed to the next generation or must be dismantled, mortgaged, or liquidated in order to pay the tax bill. That estate tax policy is morally and economically wrong.”

Smith argues that estate tax relief should be focused on businesses and farms that are family-owned and stay in the family. The legislation requires that the business or farm stay in the family in order to be exempt from the estate tax.

“Not only do family-owned businesses account for about 60 percent of our gross domestic product, but they are a critical part of America’s culture and heritage,” Smith said. “All throughout my district, I see family-owned businesses — whether it’s the Redondo Community Store or Woodworth & Co. in Tacoma. I want to make sure those businesses are passed on to their children and grandchildren.”

U.S. Congressman Adam Smith will donate a portion of his Congressional pay raise to Federal Way eighth grade student Vinnie Vallejo, who is raising money to fund his role as a Student Ambassador in the People to People program.

In 1997, the House passed a 2.3% COLA, which amounts to just over $3,000 per year before taxes. After voting against the pay raise, Smith vowed to donate his pay raise to local education and community programs.

“I think Members of Congress are paid appropriately, and I am happy to donate my raise to programs and projects throughout the community,” Smith said. “The People to People program is a very worthy project that teaches students about other countries and cultures and strengthens relations between countries, and I wish Vinnie the best of luck in his travels throughout Europe.”

The $100 donation to Vinnie Vallejo’s Student Ambassadorship is Smith’s first donation of 1999. Smith will personally present the donation to Vallejo TODAY, March 19 at 5:00 p.m. at Olympic View Elementary School, located at 2626 SW 327th St. Federal Way. Vallejo is holding an auction to raise money for the program.

In Vallejo’s role as a student ambassador, he will travel to England, Germany, France, Belgium and Switzerland this summer. People to People was founded by President Dwight D. Eisenhower to promote goodwill between youth in the United States and Europe.

Students are chosen based on their academic and community service records. They are required to raise funds for the trip.