One man does what he can to repeal estate tax
By Jeffrey H. Birnbaum
By Jeffrey H. Birnbaum
WASHINGTON — Whenever the chief executive of a big shareholder-owned auto retailer sees Jack Fitzgerald, he goes out of his way to say hello. But Fitzgerald, owner of Fitzgerald Auto Malls, knows the guy is not just being nice. He wants to sweet-talk Fitzgerald into selling his thriving business, which Fitzgerald does not want to do.
But he may have no choice. Fitzgerald's 40-year-old chain, which operates dealerships in Maryland, Pennsylvania and Florida, is too large for him to pass easily to his heirs without their being crushed by the estate tax. As a result, Fitzgerald, 70, has become a part-time lobbyist, meeting with members of Congress and peddling his version of estate-tax repeal.
Even though Fitzgerald is a native Washingtonian — having grown up not far from the Capitol — and is well-liked by many lawmakers, he has learned that changing laws is a frustrating exercise.
Still, Fitzgerald, like the good salesman he is, remains optimistic. "I think there's an interest in making some sort of deal," he said. "But it has taken a lot of my time — too much time."
Fitzgerald isn't a sympathetic character, at least from the viewpoint of an elected official. He's too wealthy. His more than 30 auto franchises in 14 locations bring in hundreds of millions of dollars of revenue each year. "Nobody loves rich people," Fitzgerald said. "When I was poor, I didn't like them, either."
So he doesn't emphasize his personal well-being when he talks to lawmakers. He makes clear that he could sell his company and protect his family financially. He worries, instead, about his 1,400 employees, a large number of whom a new owner would probably get rid of, to cut costs and boost profits. "These people are important to me," he said. "I don't want putting a lot of them out of work on my conscience."
Fitzgerald has never laid off an employee. Many of his top executives have been with him their entire careers, and their children are on the same path. Harold Redden, a vice president, started as a floor sweeper 32 years ago. Now he has two sons in the business. Garry Jenkins, an executive vice president with the same length of service, also has two sons in the company. A few longtime employees have grandchildren on the payroll.
"That's what makes this place special," Fitzgerald said. "It's a compliment to us when they want to bring sons or daughters or cousins into the business."
Fitzgerald does more than tug at heartstrings. He makes a compelling case against the estate tax on policy grounds. He notes that privately owned businesses like his are the nation's most effective engines for economic growth and job creation. Yet the estate tax has for years forced owners to sell to corporate giants, which often stifles innovation, expansion and good feelings between workers and their bosses.
Fitzgerald has been meeting with people in a position to help — and donating to their campaigns. He has been making his voice heard through the business groups pushing constantly to repeal the estate tax.
A couple of weeks ago, Fitzgerald sat at a front table during a speech by Sen. Jon Kyl, R-Ariz., at the U.S. Chamber of Commerce. Kyl is one of Congress' leading advocates for estate-tax repeal. After the address, Fitzgerald buttonholed him to express his support and to say he had a plan that would eliminate the tax without the government losing all the revenue it produces.
Fitzgerald wants to pay his estate tax "in advance." He has calculated a series of surtax rates that, if applied to people at various income levels, would replace the revenue generated by the estate tax each year. He said he is more than willing to pay through such a method rather than saddle his family with the entire burden when he dies. Fitzgerald is to lay out his plan in detail to an aide to Kyl soon.
President Bush has long backed ending what he calls "the death tax." But budgetary constraints allowed him only a partial victory in 2001. Bush signed into law a bill that eliminated the tax for one year only — 2010. It will come back to life in 2011 unless Congress acts to change it. The Senate will probably vote on the issue next month.
Opponents of repeal argue that the levy falls on only the richest 1.2 percent of Americans. They contend a sharp reduction in the tax would deprive the government of billions of dollars each year now slated for food stamps, healthcare and the like.
Fitzgerald says his plan would keep government whole while also keeping his business and employees together.