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HARDI member Karen Madonia recently testified before Congress, asking it to kill the “death tax.”
Madonia is chief financial officer of Aurora, Ill.-based Illco Inc., and co-chair of the Heating, Airconditioning and Refrigeration Distributors International’s Government and Trade Relations Committee. At a May 31 hearing before a House subcommittee, she told representatives that the tax could cause her family break up the eight-branch, 92-employee company just to pay the tax bill on the company her father started in 1973.
“That would likely mean shutting down branches, laying off workers or liquidating inventory just to be able to pay a tax bill that only occurred because an owner died,” Madonia said. “Even worse, our company might have to be sold outright.”
For the last four years, she said, her father has tried to work on a succession plan for the $40 million business, only to have to modify it as the tax laws changed.
“My dad has spent countless hours and entirely too much money trying to navigate the estate planning waters,” she said. “Instead of focusing on growing his business so he can open more branches and employ more people, he has had to strategize about how to pass his company to his kids without having to dismantle it.”
HARDI has long advocated for the estate tax’s repeal or at least clarifications making it more favorable to small businesses.
“The estate tax and the constant changing of the formula for determining its rate places an undue burden on businesses in our industry and small businesses everywhere,” said Talbot Gee, HARDI’s executive vice president and chief operating officer. “A significant portion of our members are family businesses, and they generate an estimated 80 percent of the dollar value of HVACR products sold through distribution. There has to be some clarity about the estate tax and some consistency regarding the rate if it isn’t repealed.”