By Kevin Bogardus - 10/21/12 10:00 AM EDT
Preparing for Congress’s coming lame-duck session, an ardent estate tax opponent has started his own lobby firm.
Dick Patten has formed Patten & Associates and has already signed up almost a dozen clients who were contributors to the tax pressure group he once helmed, the American Family Business Institute (AFBI). Patten’s lone target is the estate tax, which will go up in January 2013 unless Congress acts to stop it.
Patten once was the president of the group — which primarily focused on repealing the estate tax — but he left the institute in March of this year and formed his lobby shop the next month. AFBI decided to dissolve in June.
The closing of the institute led to a shakeup within the niche world of estate tax opposition, with a similar group, the Policy and Taxation Group (PATG), apparently benefiting.
"The board of directors of the American Family Business Institute made an unanimous decision to dissolve AFBI and join the Policy and Taxation Group and to encourage all AFBI families to join the Policy and Taxation Group," said Jeff Cook, PATG’s president and CEO. "We have been able to double in size and speak with a more unified voice."
“We had some disagreements within the organization at the board level, which happens sometimes in this town, and we had the parting of the ways,” Patten said about his departure from AFBI.
Cook shared a letter with The Hill from AFBI’s board of directors to the group’s supporters saying they decided to dissolve the group and “strongly encourage you to join us and become involved as part of Policy and Taxation Group so our families will be best-positioned to win the coming battle.”
“As long as these people are allies in the battle to repeal the estate tax, I desire to continue to work with them,” Patten said about the letter. He also said he is in the process of forming a new trade association under the name of the Family Business Defense Council.
Others from the institute have moved on or set up their own ventures.
Christine Hall, AFBI’s former director of development, moved over to the Policy and Taxation Group, according to the letter.
Palmer Schoening, AFBI’s former director of federal affairs, has opened up his own consulting firm, Schoening Strategies. Schoening said that he now consults for several groups, including the 60 Plus Association, and hosts a monthly meeting of coalition groups who oppose the estate tax.
Despite the changeover in the estate tax lobbying world, AFBI’s critics expect little change in the influence that the group’s peers wield in Washington.
“There are still many organizations who are very well-funded because there are several families who can save a lot of money if the estate tax is repealed. This issue is not going to go away,” said Steve Wamhoff, legislative director for Citizens for Tax Justice, which supports a higher estate tax.
Wamhoff said AFBI was one of the more aggressive groups working to repeal the estate tax. “They really tested the limits of self-restraint,” he said.
Right now, the estate tax is at a rate of 35 percent and has a $5 million exemption level. That, along with several other tax provisions, is set to expire at the end of this year in the looming “fiscal cliff” of tax hikes and budget cuts.
If Congress doesn’t act, the estate tax will go up to a 55 percent rate and have a $1 million exemption, which frightens the tax’s opponents.
“It's important that we move out of the lame duck without raising the death tax,” said Rep. Kevin Brady (R-Texas). “That would be devastating and it is our highest priority to make sure that it doesn't move to that confiscatory level.”
Brady, a senior member of the House Ways and Means Committee, has sponsored legislation to repeal the estate tax that has earned 222 co-sponsors so far. Brady called that “a strong mandate” and that he would like to see a vote on the House floor on his bill during the lame-duck session. His first priority though is that the tax doesn’t go up.
“If there's an extension of current law, we want them to include the death tax at its current level,” Brady said.
Sen. John Thune (R-S.D.) has sponsored the counterpart bill in the Senate, which has 37 co-sponsors so far.
The lawmakers will have to face off with those who support the estate tax. Wamhoff pointed to a March 2012 letter sent to lawmakers signed by his group and several others that asked Congress to either let the current estate tax expire or pass legislation sponsored by Rep. Jim McDermott (D-Wash.) that would index for inflation an $1 million exemption level.
“You can't really make this argument with the estate tax that millions of Americans are going to be effected if this goes up,” Wamhoff said. “The estate tax is essentially a tax on the richest one percent.”
President Obama has called for a 45 percent top estate tax rate, and to set the exemption at $3.5 million.
Patten is among many lobbying lawmakers to secure support for Brady and Thune’s bills. He also said more than 420 candidates who are currently running have signed the “Death Tax Repeal Pledge,” including Republican presidential nominee Mitt Romney.
Patten said the coming election will have a big impact on what happens with the estate tax.
“We are off to a running start in a focused way,” Patten said. “I feel optimistic but it depends. We could have a president who vetoes it, or we could have a president who not only signs it but spends the political capital to get it done.”
Passion runs high among the tax’s opponents.
“No one ever really looks at the impact that this has on family businesses,” said Kevin Hancock of Hancock Lumber and one of Patten’s clients, about the estate tax. “It's simply the one reason that our family business wouldn't continue. There's no close second.”
--Bernie Becker contributed to this report.