Pearle Marr

Pearle Marr

Former Vice President

Imperial Lithographics

Phoenix, AZ

Statement for the Record

U.S. House Small Business Committee

“Small Businesses and the Estate Tax:

Identifying Reforms to Meet the Needs of Small Firms and Family Farmers”

November 4, 2009

Chairwoman Velazquez, Ranking Member Graves, and Members of the Committee, it is my pleasure to present testimony on the impact of the estate tax on small businesses.

My name is Pearle Marr, and I am the former Vice-President of Community Relations of Imperial Lithographics, a photographic development and printing company based in Phoenix, Arizona. Imperial Lithographics was an emblematic small business. It was started by my parents and run by the entire family. It grew from my father’s initial dream in his home to a 140,000 square foot complex offering employment to two hundred twenty employees.

Imperial Lithographics was an important part of the Phoenix community, the source of generous donations to St. Lukes Hospital, Anti-Defamation League, Arizona Science Center, Boys and Girls Club, United Way and many more. Our family had every intention of continuing it after my parents passed away and continuing to provide employment and support to the local community. That is, until we learned of the estate tax.

When my father passed away from Leukemia, he left behind a business with millions of dollars in estate tax liabilities. My mother realized that when she passed away, those liabilities would leave the family with an enormous tax burden. We looked into the traditional estate planning options and tried to provide liquidity for our looming estate tax via life-insurance policies and tax planning strategies.

For awhile things looked okay and it seemed we would avoid the worst of the estate tax and keep the business. However, over the course of several years we realized that the money we spent on life-insurance and tax-planning was slowly draining valuable capital from the company. Machines that needed to be replaced were neglected. New, potentially profitable expansions were passed over. Good employees did not receive appropriate bonuses.

We realized that the very tools we were using to avoid the estate tax were costing us tens of thousands of dollars each year – money that we could not afford to lose. Further, it became evident that even if the business survived the estate tax, it would be substantially weakened and would not be competitive.

Thirteen years after my father died we realized that we had no choice but to sell Imperial Lithographics. Our piece of the American Dream could not survive the confiscation of the estate tax.

The loss of Imperial Lithographics was not limited to my family, but affected our employees, their families, and the Phoenix community. The new owners of the company wanted to buyout a competitor, not expand their service. Accordingly, the business was gutted, the two-hundred twenty employees were laid off, and hundreds of thousands in charitable donations to local charities dried up.

My story is not unique. Across this country many other hard-working small business owners are losing sleep over how to pay the estate tax and keep their business. They have worked hard and built a strong local business, only to learn that their success has created an estate tax nightmare for their children.

The small business owners aren’t the only ones losing sleep. Research from the former Director of the Congressional Budget Office, Dr. Douglas Holtz-Eakin, finds that when small business suffers, their employees suffer as well. According to Dr. Holtz-Eakin’s research, the estate tax burden on small business reduces employment nationwide by 1.5 million jobs.

My family and I are no longer small business owners. Our dream is gone. It does not have to be that way for America’s other small business owners and future entrepreneurs.

Chairwoman Velazquez and Members of the Committee, for the sake of small business owners, their employees, and the American dream, please introduce legislation to permanently repeal the federal estate tax. Keep entrepreneurship and the American dream alive.

Thank you for your time and consideration.