For Some Estate Tax Foes, It's Not a Matter of Money

Most owners of small family businesses have little reason to care whether the estate tax comes or goes. As the study Spending Millions to Save Billions "reveals," the fight against the tax is led by multi-millionaire families who own all or part of big businesses.

Yup, the Waltons and the Nordstroms and other families would like to do away with estate tax. But the study misconstrues their motive. Paying estate tax would not force family members to fly economy class, much less resort to food stamps. More often than not, these families are trying to retain control or influence over their family-founded businesses. And some seem to be willing to sacrifice wealth to do so.

Take the Timkens, of roller-bearing fame. One of the Timkens was a client of my father, and perhaps that's why he bought a few shares in the company. My mother held onto the shares, and in due course they passed to me. Has Timken been a great investment? Heck, no! But I still have the shares, just because I like owning a tiny slice of a famous old American manufacturer. (Only the Great Recession, I believe, finally forced the company to close the original Timken factory in Canton, Ohio.)

I hope the Timken family manages to keep connected to the company, but judging from past performance, they would do better if they didn't. Look how Timken shares have performed over the past 40 years, compared to the S&P 500.


If the Timken family had liquidated back in 1970 and invested in a diversified portfolio, like the index fund Jack Bogle was about to introduce, they would be many times wealthier today.

Update: Timken shares may be down, relative to the market, but they're not out. TKR closed today at 27.86, up 16.5% for the year.