Tough Talk, But That Darn Death Tax Lingers On

WASHINGTON — Newt Gingrich, a former Speaker of the House of Representatives, urged members of the American International Automobile Dealers Assn. to adopt a tough stance when lobbying their senators for repeal of the estate tax.

“I am really concerned about the death tax repeal,” Gingrich tells AIADA members gathered here for the association's annual congress. “If you were to take a poll in the country, the country is overwhelming in favor of repealing the death tax.

“That is why I'm delighted you are here to talk to people on the Hill, but you have to make it really clear what you want and what you expect.”

He warns the members that their senators likely will tell them, “I'm really glad you're here and I'd really like to help you, but I hope you understand my problem, I just can't quite help you because …”

When dealers hear that, Gingrich urges them to respond: “I hope you'll understand my problem which is that I am going to figure out the total cost of that tax to me personally and I'm going to spend that to beat you!

“‘I know there was nothing personal when you voted to raise my taxes and I want you to know there is nothing personal when I spend my money to beat you either.’”

While the tough talk elicited cheers from the audience, Donald Levin, an executive with the Dave Mungenast Automotive Family in St. Louis, MO, laughs.

“I remember in the mid-1990s when (Congressman) Gingrich addressed us while we were fighting the proposed tariffs on foreign cars,” says Mungenast. “He was the one telling us how much he wanted to help us but couldn't.”

The advice did not help much, apparently. Although AIADA members lobbied hard, focusing on senators likely to vote against repeal, a procedural vote in June failed 57-41 in an attempt to bring the tax to the Senate floor for debate.

Don Beyer, a Virginia-area dealer and incoming AIADA chairman at the time, hoped to add some muscle in lobbying Colorado democratic Senator Ken Salazar with Tim Jackson, executive director of the Colorado Automobile Dealers Assn.

Salazar, though, ultimately voted against repeal.

Both the National Automobile Dealers Assn. and the AIADA have made complete repeal of the estate tax (or the so-called death tax) one of their primary goals. Many dealerships are individually owned businesses that will pass to the children once the dealer dies.

Dealers see the tax as an unfair financial burden that threatens business successions. Russ Darrow, owner of the Russ Darrow Automotive Group in Wisconsin figures his children will have to sell up to one-third of the business to pay for the tax when he dies.

The tax is set to be at zero in 2010 and then will be reinstated in 2011 to its pre-2003 level of 55% on all estates valued higher than $1 million.

That scenario had several AIADA members joking they might have to be especially careful around their children in 2010.