Victor Mavar

Victor Mavar

Former Vice-President

Mavar Shrimp & Oyster Co., Inc.

630 Beach Boulevard

Biloxi, Mississippi 39530

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. I am pleased to offer my views to the committee on the matter of the Federal Estate Tax and the impact it had on one family-owned business in Biloxi, Mississippi.

I am one of the former owners and Vice President of Mavar Shrimp & Oyster Co., Inc., a family owned seafood processing and pet food manufacturing business in Biloxi, Mississippi. The history of Mavar Shrimp & Oyster Co., Inc. is a classic story of American entrepreneurialism. In 1898, my father, John Mavar immigrated from what is now Croatia to Biloxi, Mississippi. He worked as a fisherman while my mother was employed as a seafood worker. Both were hard-working and frugal individuals. They saved as much as possible and in 1920 my father purchased his first fishing boat.

John quickly became a very successful commercial fisherman. By 1926 he had accumulated enough capital that he was able was able to start a small fresh-seafood operation. His business consisted of buying from other boat owners and selling at both retail and wholesale. The business was a success. As each of his four sons finished their education they joined the family business.

My family was always thinking creatively of new business opportunities. For example, in the 1950’s we realized that the small, noncommercial fish that were typically thrown overboard could be processed and used in catfood. Accordingly, we took a waste product and turned it into a new profitable (and job-creating) operation for our business. Through such innovations and the hard work of my family, all of whom were employed in the business, Mavar Shrimp and Oyster Co., Inc. became one of the largest and strongest businesses in the community.

In the last few years of our ownership, we grossed approximately $50 million in annual sales and in peak season we employed 300 people. Our employees were paid the second highest starting wage in the city – only civilians on the local military base were offered a higher starting wage.

As you might assume, we never had any intention of selling the business. That is, until we became aware of our estate tax liability, and realized that we would be unable to pay the tax without selling most or all of the assets. In fact, we were forewarned that it was very possible that my family would possibly be forced to sell at an unfavorably low price if one or more of the owners suddenly died. Because we wanted to save our children from the difficulty of dealing with this problem, we elected to sell in 1988 to the H.J. Heinz Company when they made an offer to buy our business.

When Heinz took over, we hoped that they would keep the business running in Biloxi for the long-term future. Unfortunately, within five years, they chose to relocate the manufacturing operations to Pennsylvania and Kansas. Obviously, most of our employees, who had lived in Biloxi for all of their lives, were not able to simply relocate with the new owners. While a handful did move, the majority simply lost their jobs and had to start new careers. Today, I regularly meet folks on the streets of Biloxi who tell me that they used to work in our business, and wish it had never been sold.

Ironically, even with the sale of our business, I am still concerned about being able to pay the estate tax. I’ve spent a fortune on attorneys, accountants, life-insurance and other tax-planning measures, such as early gifting to my children and charitable endeavors. Most disappointingly, I’ve avoided making any investments in new businesses. I have chosen to do this despite my interest in supporting the rebuilding of Biloxi, which was ravaged by Hurricane Katrina in 2005. In fact, I have received requests for investments in several local businesses, including a housing development that would help lower and middle income families who lost their housing due to the hurricane.

Despite my desire to help Biloxi rebuild, I have been forced to turn them all down, lest I burden my children with the same death tax that we sold the business to avoid. As I see it, the death tax has encouraged a “wealth-redistribution,” not from the rich to the poor, but from the local community to the national corporations.

Today, one of my sons has his own seafood processing business. His is one of approximately five such operations that remain in Biloxi. He has already achieved considerable success, and will likely continue to do very well. I am proud of him, but I wish that he could work hard without the threat of the estate tax.

Members of the Committee, my family’s small business is gone, and no legislation will bring it back. But the thousands of other small businesses do not have to face the estate tax. You can end this unjust law. For the sake of my son and other entrepreneurs in places like Biloxi, Mississippi, I ask that the committee support legislation to permanently repeal the estate tax.