Family businesses counting on Congress to lock in tax cuts

In December of 2017, President Donald Trump signed the Tax Cuts and Jobs Act. Family business owners all over the country breathed a sigh of relief because while the estate tax was not repealed, the exemption was increased to a level that protected many families from the ever-present possibility that they could lose their businesses to taxes if an owner died.

My dad bought our company, ILLCO, in 1973. We provide vital heating, air conditioning and refrigeration equipment, parts and supplies to hospitals, schools, nursing homes and grocery stores in parts of Illinois, Indiana and Wisconsin. We are active members of the communities we serve, and we have 98 great employees spread throughout our eight branches. We are a family business that has succeeded because of the perseverance and hard work of our first generation, and our second generation is poised to carry the torch forward.

Family business owners constantly worry and prepare for the death tax. It creates huge issues, which stifle growth and pull resources from expansion activities to legal, accounting and insurance expenses. The increased estate tax exemptions in the tax act have helped in the short term, but until the estate tax is fully repealed, or at least the current exemptions are made permanent, family businesses will continue to have the cloud of the estate tax hovering over us. Locking in the higher exemptions would allow many family businesses to plan for their futures by putting their assets and energies to work growing their companies.

According to the Conway Center for Family Business, "Family businesses account for 64 percent of U.S. gross domestic product, generate 62 percent of the country's employment, and account for 78 percent of all new job creation." They truly are the backbone of the American economy, and our tax laws should not discourage entrepreneurs from taking the risks necessary to build great companies. Since most family businesses are organized as pass-through entities, which pay taxes at the individual rates of their owners, locking those rates at the lower levels is imperative if we want them to continue to grow and expand.

The Tax Cuts and Jobs Act protected jobs and infused capital into our economy. Additionally, it created greater protections against the fundamentally unfair estate tax, providing needed, albeit temporary, relief. It is imperative that we capitalize on this momentum. Congress must act by making the cuts to the individual rates permanent, just like the cuts to the corporate rates, as well as continuing the fight for a full repeal of the death tax. Doing so would provide needed predictability and stability for my family business and many others.

Karen Madonia, of Aurora, is CFO of ILLCO Inc., a Chicago-area distributor of heating, ventilation, air-conditioning and refrigeration equipment, parts and supplies.