Congress gives Campbell Estate tax break
By Susan Roth
Advertiser Washington Bureau
WASHINGTON Campbell Estate, the Kapolei real estate development giant, will get a special benefit on estate taxes when the trust expires in 2007, thanks to three members of Hawai'i's congressional delegation.
Sens. Daniel Inouye and Daniel Akaka and Rep. Neil Abercrombie, all Democrats, acknowledged that the provision they successfully added to the $1.35 trillion tax package was intended to benefit the Campbell Estate, although other similar-sized businesses will benefit. Democratic Rep. Patsy Mink did not participate.
Their amendment was one of only four special interest provisions added to the tax bill, although not all were related to estate taxes.
While tax bills often contain such specific measures, Republican leaders sought to keep this one relatively clean because it was already controversial.
President Bush is expected to sign the bill tomorrow.
Campbell Estate, which has also lobbied Republican tax-policy leaders for about two years, was the fourth largest contributor to the delegation in the last election cycle. Federal Election Commission records show estate officials gave the delegation at least $10,750 in 1999-2000. When Inouye was last elected in 1998, estate officials gave him $7,500.
But while Inouye, Akaka and Abercrombie urged inclusion of the provision for Campbell Estate, only Abercrombie voted for the bill. Inouye and Akaka voted against it.
The tax package phases out the estate tax in 2010. The current $675,000 individual exemption will be raised to $1 million in 2002, $2 million in 2006, and $3.5 million in 2009.
But the repeal doesn't come early enough for the billion-dollar Campbell Estate, whose trust arrangement is to expire in 2007. Then, the 20-plus shareholders believe, they would have to liquidate assets to pay the estate tax in one lump sum. Assets include the 10,000-acre Kapolei development and 62,400 acres of agricultural conservation land on O'ahu, as well as Mainland properties.
Liquidation would likely mean breaking up the business, a loss of control by Hawai'i residents and a potential loss of jobs, the lawmakers believe. The estate employs about 100 people.
To ease the pressure on Campbell Estate shareholders, the provision allows family businesses with 15 to 45 shareholders to have their estate taxes deferred for four years and then to pay the taxes in installments over 10 years. Those businesses would have to pay interest on taxes due.
Inouye and Akaka originally proposed giving that benefit to businesses with up to 75 shareholders, but agreed to the smaller number to limit the government's loss of revenue.
Congressional officials estimate deferring taxes will cost about $3.2 billion from 2001 to 2011.
But Paul Cardus, an aide to Akaka, said the senator supported the provision because it does not lessen the Campbell family's tax burden. "It just gives them a period of years to pay it," Cardus said.
Inouye acknowledged voting against the tax bill knowing it would pass with the Campbell Estate provision included.
"It would've been inconsistent for me to vote for it," he said of the package. "I've been against it all along."
While repealing the estate tax is popular, he said he fears it will eliminate the incentive for philanthropy.
"The tax program is not a good one," he said. "But in that program, I wanted to make certain improvements. If it was going to be in place, I wanted to make certain that my constituents were protected. If I can do that, wouldn't you expect that from me?"
Akaka, a longtime supporter of estate-tax relief for small businesses, also opposes complete repeal of the tax.
"This is an important provision that the senator has worked on for two years, and he is happy it was included," said spokesman Cardus. "But this provision and the good it will do in the long run for the employees of the estate in Hawai'i, as well as business and economic development in Kapolei, did not offset what Akaka felt was a tax bill that was too large and too gimmicky."
Abercrombie, who has been invited to attend the bill signing at the White House, also is a longtime supporter of estate-tax relief for small and family-owned businesses.
Although he sees the provision for the Campbell Estate also helping preserve family businesses, the estate is not the kind of small family business Abercrombie typically talks about. Abercrombie has said the rich can hire attorneys and tax specialists to help them avoid estate taxes.
In the 1999-2000 election cycle, estate officials gave Abercrombie $6,500, Mink $2,250 and Akaka, $2,000, FEC records show.