Danville Express

Newsfront - November 9, 2007

Bill would change death taxes on small farms

Break intended to help small family businesses

by Natalie O'Neill

A bill introduced last week by U.S. Rep. Jerry McNerney (D., 11th) could give small business owners and farmers in Danville and Alamo tax breaks when passing their property on to family.

As the law currently stands, small businesses and farms worth under $2 million are exempt from estate tax, or what some call "death tax." The new legislation would bump the exemption up to $8 million.

"It could certainly have an impact on Danville, given the number of small businesses downtown - in terms of keeping them open from generation to generation," said Andy Stone, spokesman for McNerney.

High death taxes sometimes force family members to sell property to developers, which have shut down more than a few local farms and businesses. The congressman sees this as both an economic and environmental issue, Stone said.

"There's a burgeoning movement to encourage people to eat locally grown food. You can't eat locally if there are no local farms," he said.

Danville business owners said the majority of small businesses downtown aren't yet worth enough to be effected by the bill, but agreed with the principal of the legislation.

"That could really open things up for small businesses, especially as they grow," said John Knowles, owner of California Pedaler on Hartz Avenue.

"It's just the definition of 'small business' that's my question - for a small business, $8 million is a lot," he said.

Local business owners aren't the only ones who have questions about the logistics of the legislation. The McNerney camp has gotten flack from its own democratic supporters for giving tax breaks to those who are already well-off.

But unlike corporate giants, Stone said family farms and businesses have strong roots in the community and are generally not run by exorbitantly wealthy people.

"It's not like we're giving a tax cut to Paris Hilton. These are hard-working people - people that live modest, middle-class lives," he said.

Several Danville small business owners agreed.

"It's a beautiful thing. Any tax cut that promotes the well-being of the family is a blessing," said Amid Corlandt, owner of Vally Medlyn's, who runs the restaurant with his wife and son.

As the law stands today, the amount of money the business or farm is worth, exceeding $2 million, is taxed a 45 percent estate tax. So, for example, a $5 million family farm would be charged 45 percent of $3 million - or $1.35 million.

Armand Borel, owner of Danville's 17-acre walnut orchard near Costco, said the bill would not apply to him, since his land is worth more than $8 million. He said he'd need to learn more about the legislation before forming an opinion on it.

Alamo Republicans had mixed opinions about the bill and McNerney's local impact.

"There are definitely a lot of Republicans in the area and he could be trying to get that support," said Alamo Republican Tony Carnemolla. "But I'll give him credit, he did show up to our meeting about the Vet Hall and he's in support of it."

Joe Rubay, an Alamo member of the Contra Costa Republican Party, said he was for the bill as long as it's a reduction, not just "a shift in the tax burden."

"Whatever the government can do to keep the money in the hands of the people who earn it - I support these measures," he said.

But ultimately, the issue is non-partisan, Stone said.

"We've gotten a lot of support from both sides," he said.

The goal here is to reflect what the congressman has heard from his constituents, he added.

"He met with farmers, ranchers and small business owners. He's heard from them how important this is," he said.


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