In order to understand what is most troubling to family firms, survey respondents were asked to rank the importance of various public policy issues. The issue that got the strongest response was “reducing the deficit and debt.” Successful family firms embrace a sense of stewardship and fiscal responsibility, and they expect our government to do the same. Interestingly, looking more closely at this issue, the level of concern over the country’s debt and deficit increased with company longevity; a full 60% of respondents from businesses with over 100 years of operation ranked it as their number one or two concern. The tax code is also a major frustration for family firms. Reforming it even slightly beat out elimination or reduction in the estate tax in the order of importance.
In the context of debate about increasing individual income tax rates, the question often comes up about how this will impact businesses that are organized as S-Corps or LLCs. FEUSA’s survey indicates a strong plurality (47%) “will disburse additional funds to owners to ensure that they receive distributions sufficient to pay their taxes resulting in less money available for capital investments and other company expenditures” to deal with this issue. This is significant because of the survey respondents that predicted that they would add employees in the next 12 months, 70% are either S-Corps or LLCs.
What’s the most important public policy issue for you? (respondents ranked the following in order of importance)
1. Reducing the deficit and debt
2. Reforming the tax code
3. Eliminating or lowering the estate tax
4. Reducing regulations
5. Maintaining 15% rate on capital gains and dividends
What should Congress do about the estate tax?
- 41% Eliminate altogether
- 21% Reduce it for every estate, regardless of size
- 28% Make permanent today’s policy
- 10% Don’t know / Other