Mike Flesher, president of the American Rental Association (ARA) and president of Taylor Rental Center in Vestal, N.Y., offered testimony before the Small Business Subcommittee on Economic Growth, Tax and Capital Access in the Rayburn House Office Building in Washington, D.C., on May 31, 2012, addressing the effect of the estate tax on small businesses.
Flesher was invited to testify by Subcommittee Chairman Joe Walsh (R-Ill.). Prior to the hearing, Rep. Richard Hanna (R-N.Y.), who is a member of the subcommittee and whose district will include Vestal starting next year, visited Taylor Rental Center on May 23 to tour the facility and discuss the impact of estate taxes with Flesher.
If nothing is done to extend the current $5 million exemption and 35 percent rate by the end of 2012, the estate tax will revert to 2000 levels, which include a $1 million exemption and 55 percent tax rate.
“It was an honor to be given this opportunity. I was excited to go to Washington, D.C., to testify in front of the subcommittee on ARA’s behalf and to explain what is at stake for my business and for so many others in the equipment rental industry. I was really looking forward to it,” Flesher says.
Of the more than 100 associations involved in the Family Business Estate Tax Coalition, ARA was chosen to offer testimony, largely due to the relationships ARA members have built with legislators in Washington, D.C. In addition to the relationship Flesher has built with Hanna, ARA members also have made close connections with subcommittee members Rep. Bobby Schilling (R-Ill.) and Rep. Steve Chabot (R-Ohio).
John McClelland, ARA’s vice president for government affairs, says the invitation speaks to the power of building these relationships.
“Many legislators become allies when ARA is fighting for something that has an immediate, significant impact on our industry and our businesses because of conversations they’ve had with ARA members about the effect of policy on their businesses and their lives. Those personal stories leave an impression and help our issues stay top-of-mind with elected officials,” McClelland says.
In preparing his comments for the hearing, Flesher worked closely with McClelland to compose 59 pages of testimony and fashion responses to potential follow-up questions from the committee.
“This is an issue we’ve been talking about for a number of years. I was familiar with it and John has written several briefings on it over the years. It was just a matter of putting together everything we’ve been talking about with the perspective of how this has affected my business as well as business in general,” Flesher says.
“A lot of work was involved in getting ready for this hearing, but in the end we were successful in supporting small businesses by talking about the impact of an uncertain estate tax law on the equipment rental industry,” McClelland says.
The hearing opened with remarks by Chairman Walsh before Flesher and three additional witnesses offered their comments. Flesher also submitted economic impact information about the equipment rental industry, emphasizing that, “We have about 4,000 ARA members investing billions of dollars each year in equipment along with significant investment in real estate and buildings that are necessary to house our rental stores and to store our equipment.”
In his testimony, Flesher referred to the impact of estate tax uncertainty on both the equipment rental industry as a whole and on his own business. “Mr. Chairman, there is a lot of rhetoric about how the estate tax really only affects rich people. Let me say here for the record, I do not consider myself or my family rich. Every day for the past 43 years I have gotten out of bed and gone to work to make a living. I have invested my resources into a company that has grown and has been successful despite some tough times over the past few years. My estate is my company, I do not have a large amount of liquid assets that can easily be sold to pay estate taxes; my company will have to be sold.”
Chairman Walsh echoed Flesher’s concern. “Mr. Flesher, you said it. ’My estate is my company.’ Bingo. I’m going to steal that line,” he said, noting that when families are grieving the loss of a loved one, they also are required to worry about losing the company that has supported them for years.
“We’ve paid our taxes over and over again,” Flesher said when asked by committee member Yvette Clark (D-N.Y.) about the responsibility of businesses to give back to the country financially. “We don’t want to not pay any taxes. We don’t want to not do our part. We want to be part of the country we’re so proud of, but we don’t want to be taken advantage of either.”
The hearing concluded with Chairman Walsh acknowledging that “the estate tax is a critically important issue for small businesses” and entering statements from numerous business associations about the negative impact of the estate tax into the record.
“I thought it was an interesting process that pointed out how complex these issues are,” Flesher says. “This was an enlightening experience that helped me gain a better understanding of the big picture. We all tend to get a narrow focus, but there are multiple
sides to each issue. All indications were that something would be done and we are expecting that whatever happens will be after
the November election.”