Bill Would Give Estate Tax Relief to Family-Owned Businesses
By: Dawn White
Updated: February 19, 2013
FREDERICK, MD- A local delegate is hoping to make it easier for family-owned businesses to stay afloat.
Robert McCutcheon is a fourth-generation co-owner of McCutcheon Apple Products in Frederick.
"I would like to see it continue as a family business on into the future," says McCutcheon.
McCutcheon could get some help passing the business along to his children. Delegate Kathy Afzali is sponsoring a bill to give some relief to all family-owned businesses in Maryland.
"We have a situation where businesses do end up having to close because sometimes the children of the family cannot afford the estate taxes," says Afzali.
Currently, the first $1 million in value is exempted from estate taxes. After that, the heirs face a 16 percent tax. Afzali's bill would exempt the first $5 million in value and have a five percent tax after that.
The McCutcheons have been stocking the shelves for 75 years. Robert hopes the estate tax relief could keep their business in the family for another 75 years.
"Any bill that they can pass that will reduce the burden of taxes on a business when it changes hand as an asset is a good thing," he says.
Heirs would have to work at and keep the business for 10 years in order to get the estate tax relief.
"For a person to be able to say, 'Well, I'll be working there for the next 10 years.' That is really a long-term obligation," McCutcheon says.
"I'd love to eliminate the tax completely because I believe you pay taxes all your life," Afzali says.
"Why should you have to do it after you die still? You still are paying taxes, but this is the state of Maryland after all, so I do have to compromise because I know many of my colleagues like taxes."
"Why should you have to do it after you die still? You still are paying taxes, but this is the state of Maryland after all, so I do have to compromise because I know many of my colleagues like taxes."
It's a compromise Afzali hopes happens during this year's session to keep businesses in the family.
You can read the bill by clicking here.
Afzali sponsored a similar bill during last year's session, which gave estate tax relief to farming families. The governor liked it so much he took it on under his name. The bill passed and went into law last July.
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