U.S. Senate Committee on Small Business and Entrepreneurship Holds Hearing on Succession Planning

The Senate Committee on Small Business and Entrepreneurship met on January 24 to discuss the inadequate level of preparedness for business succession among older owners in small and rural communities. In her opening statement, Committee Chair Jeanne Shaheen (D-NH) noted that the aging population is growing, and more than half of all businesses in the United States are owned by people over the age of 65. “This hearing is an opportunity to think about how we help those small business owners transition their businesses” she said, and “how we help them retain the legacy of those small businesses.”Ranking Member Senator Joni Ernst (R-IA) added that nearly one-third of all business owners plan to pass their business on to a family member. In many of these cases, she said, the estate tax is detrimental to those inheriting the businesses. “We are now in the time of Biden-omics,” she stated, and “there are very high interest rates and rising costs.”?

Palmer Schoening, Chairman of the Family Business Coalition in Washington, D.C, was the first to deliver testimony. He remarked that tax laws and regulations are changing so regularly that a business can never be comfortable or safe. Schoening argued for a permanent extension of the Tax Cuts and Jobs Act (TCJA), and concluded that succession preparedness can be improved through partnerships between government, local colleges, and business owners.?

Theresa Hildreth, the Executive Director of Calhoun County Economic Development Corporation in Iowa, stressed the importance of preserving the family farm. “The average age of Iowa farmers is 57,” Hildreth stated, “and there are four times the amount of farmers over 65 than there are under 35.” Supply chain issues, fuel costs, high interest rates, and high inflation were all mentioned as factors that inhibit young farmers from inheriting their family farm.?

President of the Exit Planning Institute in Ohio Scott Snider was adamant that better educational programming is needed for small business owners to pass their businesses on, and also stated that within the 30 million small businesses in the U.S. today, 90% of the wealth is trapped in the business itself.?

NEMWI will continue to monitor the progress of small business and job opportunity legislation. A recording of this hearing can be found here.