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The Food Marketing Institute (FMI) isn't a fan of a tax proposal, put forward by President Barack Obama during his State of the Union address to the nation this week, to radically revise the current capital gains system.
"President Obama's plan to eliminate the 'stepped-up' basis for calculating capital gains on bequests and other gifts will make it significantly more difficult for family-owned supermarkets to stay 'family-owned,'" asserted Andrew Harig, director of government relations at Arlington, Va.-based FMI.
Continued Harig: "This proposal will not only increase the complexity of the already Byzantine tax code, it also injects more expense and uncertainty into the arduous process of estate and succession planning -- a serious concern for businesspeople who want to pass along their companies to the next generation of leaders. And to add insult to injury, the president included a significant tax increase in his plan."
Pointing out that "business owners already face a confiscatory estate tax of 40 percent," Harig noted: "The elimination of the stepped-up basis has the potential to add yet another 'death tax' on top of that. The president may have been targeting millionaires with this proposal, but he is squarely hitting middle-class food wholesalers and retailers who play an important role in their communities as leaders and job creators."
FMI said it would continue to work with the Family Business Estate Tax Coalition to lobby Congress to abolish the estate tax.