Wedding Favors Business is Flat Lined by Death Tax

A family-owned wedding party favors company in Oak Park, MI stands to lose 55% of all its assets when it passes from one generation to the next. That's over half of everything, including land, buildings, equipment, money, and more -- all because of the current Estate Tax law which is really a tax on death.

The family, who wishes to remain anonymous, suffers from the fact that they have to make a decision on closing the doors of a 15 year wedding favors operation instead of leaving the business to their first born. The company owner states, “There is no justice in this tax. We have worked for years to build our unique wedding favors product line and its sad that we are forced to shut our doors instead of leaving the burdens of operating a business ‘in the red’ to our son. At this point we have not made a final decision on what we will do, but, it makes more business sense to sell everything and leave our offspring to build their own establishments off of our assets.”

If the family chooses to pay the taxes and keep the business alive by passing it on to family members, the business must sacrifice the following:
• Branding equipment that was used to personalize wedding favors,
• High tech printing equipment that was used to make unique products like their specialized tea and coffee wedding favors
• A lot adjacent to the place of business that was a site for future business development, or
• Re-mortgage the office building

These factors are detrimental expenses to their operation. The high tech equipment carries a lease and the maintenance for this equipment is a huge expense. The cheap wedding favors that are made with this equipment are lucrative assets; however, in order to cover the taxes a solution would be to end the lease and maintenance expenses.

The adjacent lot carries a tax and maintenance expense. This lot is a future site area for the family’s business development. An option to save the business would be to sell the lot and use the equity to cover a portion of the estate tax. Coupled with this idea is to re-mortgage the office building. The equity from this building combined with the sell of the lot would ease a bit of the estate tax pain.

Because of this outrageous tax, 70% of families choose to cash out or abandon their business after just one generation. And only 13% survive into a third generation.

The reality is, people can't afford to pass on their business. They sell out, letting long-time employees go. Not because they want to, but because they have to. The echo reverberates through an entire community.

If you're concerned that eliminating the Death Tax will add to the budget deficit, don't be. Independent studies reveal that it would actually help reduce the deficit.

You can help us change this unfair tax. Let Congress know that you believe a family's roots in a long-time business are a vital anchor in your community. All it takes is a grass roots effort. Pass it on.