Empowering Family Businesses: Insights about Policy and Tax

Patricia M. Soldano
President, Family Enterprise USA
Founder & President, Family Taxation Group

Pat Soldano brings over three decades of experience in providing family office services. Formerly the owner of Cymric Family Office Services, she later served as Managing Director of the Western Region for GenSpring for five years, transitioning to a role as a Family Office Consultant. Presently, she holds dual roles as President of Family Enterprise USA, dedicated to promoting the growth of family businesses in the US, and as Founder and President of Policy and Taxation Group, advocating for tax reform and economic policies benefiting successful families, family offices, and family businesses. Additionally, she serves as Principal Advisor to the Drucker School Global Family Business Institute, facilitates the Women's CEO Affinity Group at CSUF Family Business Center, and contributes to Trust & Estate Magazine's Family Business editorial committee. Ms. Soldano holds an MBA from Claremont Graduate School, The Drucker School, and a BA in Business Administration from Cal State University Fullerton.

Pat Soldano spent over 30 years providing family office services as owner of Cymric Family Office Services, and then as Managing Director of Western Region for GenSpring for 5 years and then a Family Office Consultant.

Currently she is President of Family Enterprise USA; its mission is to promote the growth of generational owned family businesses in the US, and President of Policy and Taxation Group, which she formed in 1995, that works to reduce onerous tax and economic policies for successful families, family offices and family business.

Kirby Rosplock

Welcome to the Taman Learning podcast. I'm your host, Dr. Kirby Rosplock. And today we have Pat Soldano, who is President of Family Enterprise USA and heads up the Policy and Taxation Group. We're thrilled to have Pat here today because we're going to learn a lot more about what's going on in the family business and the family office world. And maybe, Pat, the first place I'd love to start is, can you just tell Can you tell us a little bit more about both of these organizations that you run?

Pat Soldano

Sure. Happy to do that. Well, Kirby, as you know, I've had a long career in the family office space, starting in a single-family office, the field family. Moving on to a multifamily office, my own multifamily office, and selling to Jenspring, where you and I met. Along the way, I had a client, a wonderful woman client die at the young age of 38. And her mother died five years later, and I got to deal with the estate tax. It was a horrible experience. While the economics wasn't the issue, it was really the emotional toll that it took on this family, and all of us, quite frankly, based on what the IRS put us all through. I was advised by some experts to go back to Washington, DC, and start talking to them about how onerous this tax was on family businesses. And lo and behold, that got me to form in 1995 Policy and Taxation Group. Its focus has broadened recently because now we focus on all tax and legislative issues, economic issues that affect successful individuals and family offices. Because unfortunately, in this country, wealth isn't a good thing, and successful individuals are somewhat under attack.

Pat Soldano

In fact, 70% of the voters in America believe in a wealth tax. So About four years ago, the Board of Family Enterprise USA came to me and asked me if I would take over this organization, which had become inactive. I felt that the two organizations were very synergistic because Family Enterprise USA, as you know, because you've been involved with it, is a 501(C)(3), and it's actually a non-for-profit, that advocates for family businesses at a national level in Washington, DC, generationally owned family businesses and their lifetime savings, all sizes in all industries. We're different from a trade association because trade associations work on those issues that affect the business. We work on tax and economic issues that affect the families of those businesses We're the only organization that does that. And again,a national level and representing all sizes of business, small, medium, and large, and all industries of businesses.

Kirby Rosplock

I can imagine these work really synergistically, and perhaps some of the family businesses that are building and eventually grow into and might even have the need for a family office. So the issues that you're looking at towards the family business, and then as individuals become wealthier, high networth, or evolve into a family office, go hand in hand. I could see this makes a lot of sense for you to lead both of these.

Pat Soldano

Yeah, that's absolutely the case. Not all family businesses have family offices. As you know, some of them are embedded in the business if they become large enough. But there is substantial overlap. We keep the organizations very distinct. They have separate boards. They have separate articles of incorporation, of course. And while there are issues that overlap, there are some maybe it's unique only to family businesses or only to family offices. But we work those tax, again, tax and economic issues that affect the families of the business to the families of the family offices, or just generally people in this country that have taken risks and built wealth in whatever form and supported what we are as a country.

Kirby Rosplock

I know Family Enterprise USA, I mean, again, it's right behind you on your tagline, research, advocacy, and legacy. I mean, one of the things that I've always admired the work that Family Enterprise USA champions, not just the advocacy on Capitol Hill, but really trying to understand the issues from the constituents and the family businesses across the country. Maybe you can tell us just a little bit more about the annual family business survey that you conduct.

Pat Soldano

Yeah, we're thrilled to conduct this survey every year because, quite frankly, without it and the other research that we do, we wouldn't have anything to talk to members of Congress about. So the survey is very, very important. This year, we had 789 respondents, so almost 800, which is 25% more than we had last year. And we've been able to do that by working with these 40 plus family business centers around the country who've been so supportive of our work. And we take the responses that we get from all these family business owners, and we meet with members of Congress. We really do meet with members of Congress, both on Zoom and in person. I have a team of over 10 people in DC that do this on a regular basis. It's the most important part. A lot of people that work in DC talk about what's going on, and they talk about doing meetings, but they don't actually meet with members of Congress or staff. And that's what we do. And we're very fortunate, which I think we're going to talk about later, to get Congress to form a Congressional Family Business Caucus. And again, this is the voice.

Pat Soldano

Family Enterprise USA is the voice for families of family businesses in Washington, DC. And this survey is the backbone of what we do.

Kirby Rosplock

I know you've been doing this for a long time. I was on the board many moons ago of Family Enterprise USA, and I remember how powerful that whole process was - meetings on Capitol Hill, really seeing the eyes open when you talk to some of these congressional constituents. Tell us more about some of the issues that you dig into with the survey and what you're sharing with Washington about the state of family businesses today in the United States and the impact that they make.

Pat Soldano

Well, one of the things that we share with them is who are the family businesses in America America. And many times, legislators say to me, Oh, you mean small business? And I say, no, I mean all family businesses, small, medium, and large. And that has been a real difficult thing for members of Congress to understand that there are these family businesses. In fact, 87% of the businesses in America are family-owned businesses, which is a huge percent when you think about it. They generate 59% of the jobs in this country and 54% of the GDP. So they are very, very important. They wrestle with all sorts of issues. Of course, during the pandemic, they were somewhat unique, but they are from all industries, as I mentioned earlier. Members of Congress don't understand that either. When we talk about family business, many times they talk about family farms. We say, yes, we are a country of family farms, but in fact, this year, only 4% of our respondents are from family farms. In fact, 24% are from manufacturers. When you think about it, manufacturers, construction, retail are our top three. When you think about it, family farms are very important, but they have the same issues that manufacturers have or retail industrial, these other very hard asset-concentrated businesses.

Pat Soldano

While we want to help family farms, and of course, we have family farms in our organization, we also want to help manufacturers and those other businesses that have these hard and liquid assets. That's some of the information that we bring to members of Congress. We talk to them about what are their economic and tax issues. And this year, in terms of the economic issue that's most important to them. Amazingly enough, it was the national debt. Now, I'm going to tell you what it was last year was income tax. In fact, number one was income tax, number two was a state tax, and number three was simplifying the code, and the budget deficit was actually number four. Well, in 2024, we had a huge shift, and the budget deficit is now number one concern of economics policy in this country at a whopping 30 %. Next to 23 % is that income tax. And we know why that is. It's because we've learned that 80 % of all family businesses operate as a pass-through entity. And that It means they're not paying 21% corporate tax. They're paying 37% in taxes, and that's just at a federal level.

Pat Soldano

Second is income tax, very high, again. Next is the estate tax, and next is reducing government regulation because family businesses feel that they are really overregulated, as I think many businesses feel. So that information is very, very important for members of Congress to know about.

Kirby Rosplock

And what do you attribute this maybe shift from income tax number one to the debt ballooning issue that we have in this country? I mean, obviously, we know it's going up and up and up, but do you have any thoughts on why that risen to the top?

Pat Soldano

I do. I think it's because family business owners understand what debt does to a business, and they understand what debt does to a country, and they're very, very concerned about that. I think that's where they're unique, and I think that's where they have a unique voice when they talk to members of Congress and they can share their concerns about debt and their own personal experiences about debt and how it affects their companies as well as their perception of how it affects the economy.

Kirby Rosplock

Tell us about some of the other types of data that you're capturing in the survey, and maybe any highlights of things that really struck you as, wow, this is unexpected. I know we have an election year, so I'm sure there's got to be lots of interesting things that you're learning.

Pat Soldano

Well, in terms of their tax policy, because we ask these as different questions, income tax still is their number one tax policy concern, but it was 41% this year down from 53% or 50% last year. Second is the estate tax, but down, it was 27% last year, it's now 19%. Then payroll tax is up a little bit at 13% and so's capital gains. But the real eye opener was that wealth tax, 5% of them believe their number one tax concern is wealth tax. That wasn't even on the radar, I think it's a justifiable concern because we know, as I said earlier, 70% of the voters believe in a wealth tax. Now, they don't know what that means. They don't know how it would be executed. They don't really understand the policy, just like they don't know what fair share is. But family businesses are very concerned about a wealth tax because think about it, they are considered wealthy. Most family businesses probably don't consider themselves wealthy, but they are considered wealthy, not only by members of Congress, but voters. And if there's a wealth tax in this country, it's going to apply to them.

Pat Soldano

And that means their family business will probably have to be valued every single year, and they're going to have to pay a percentage of tax on that evaluation. And we all know that many family businesses are asset-rich and liquidity-poor, right? So they may not have the liquidity to pay that tax. Now, there's been some discussion around how they could be exempted in some way, shape, fashion, but not entirely. We've worked with exemptions with all the 30 plus years I've been working in DC now. They've never been able to understand or define family businesses, which we all know why. It's very, very difficult. And so trying to get some exemption, I don't think is going to be possible. They tried that many years ago with the estate tax, and they had legislation, Kirby, you may be even familiar with it, called QFOBI, which was basically a qualified family business carve-out that became so unworkable, they actually repealed it after six years. So when people talk about, Well, maybe we'll have a tax, but we'll try and figure out how we can carve out family businesses, I don't have a lot of hope for that. I think those are some of their tax concerns different than they were from last year.

Kirby Rosplock

Would you put that wealth tax as one of the most critical issues they should care about, or are there other things that you think take priority?

Pat Soldano

I'm still concerned about the income tax and this disparity between the 37 % and the 21 %. And then a wealth tax only in the sense that there is this movement. And in fact, last December, the Senate Finance Committee had  two, the Senate Finance Committee had one hearing, and the Budget Committee had another hearing. Both of them focused around taxing the wealthy more in this country. And that's what was in the title of the hearing notice. So that has really, in my mind, elevated the issue of wealth tax in this country. But I still believe there are other issues like income tax and current issues, as you're well aware of, at the end of 2025, all of these provisions that were in the last tax bill are going to expire, whether it's the individual tax rate, corporate tax rate, capital gains tax rates, are some provisions there. The estate tax exemption at an all-time high, over 13 million per person, double per couple, is going to go back to half of that, at least half of that. Those things are all going away. We're already focused on that. We're very concerned based on politics. And politics is what generates everything in this country.

Pat Soldano

People, I think, believe that they can stay out of politics and it won't affect their lives. And unfortunately, it affects all of our lives. And I believe that all tax policy, as well as other policy in Washington DC, is all led by politics. It's not led by common sense or what makes good policy. It's really led by politics, which is why we're bipartisan, and we stay bipartisan, and we always will be bipartisan. And while we're very excited that the Congressional Family Business Caucus is bipartisan as well. But all of those provisions that were in the Build Back Better Act, they're all going to be resurrected. They've been resurrected year after year. And the tax provisions that they're talking about right now include all of those things I've talked about, as well as doing some other things in terms of some of the international tax income levels and changing, as I talked about, the individual rates, treating some of the income that's currently carried interest income as capital gains, maybe ordinary income. All these things are not old. I mean, new. They've been talked about for quite some time, but they're all concerned.

Pat Soldano

I'd also like to mention that right now there is a tax bill that's sitting at the Senate that appears less and less likely that it's going to go anywhere. But in this tax bill, unfortunately, there is some good things for family businesses, and that is reverting back to bonus depreciation, which has almost been eliminated, as well as some interest deductions that are important for family businesses, as well as R&D expensing, which now has to be capitalized over five years. And that's been devastating to a lot of manufacturers. In fact, I know a lot, personally, have said, I just stopped doing R&D, which is not good for the company, it's not good for the employees, and it certainly is not good for our country either. Those are things that we hope there is a tax bill next year that it will get in there, and we believe it could. And we also believe there could be another tax bill later in the year. It's possible that those could get back in. But all those things are very important to family business owners.

Kirby Rosplock

So tell us when and how people listening, watching can find out how to participate in your family business survey, if they're a family business owner or stakeholder, when does that typically kick off and when do you start recruiting or getting more people to participate?

Pat Soldano

Well, unfortunately, we've just ended it. We started the early year. We usually start on January 4th, and we used to have to be out in the field 90 days. Well, now we don't do that anymore. We're at maximum 60 days in the field. Again, with all these family business centers as well as some of the Trade Associations now help us. We closed it the end of February. We've already got all the results final. The executive summary is on our website. But next year, all the emails will be going out. We ask people to please complete the survey. It's so important because, again, we can't do the work without it. We'll definitely make sure. I know that you send it out, Kirby, to your family business owners as well. We really appreciate that. We ask everyone that can to send it out so we get as many as responses. It's treated as a really critical piece, which it is now. We actually have people asking for it now, whereas before, so many people didn't even know it existed.

Kirby Rosplock

Yeah. I think the power of that data, and especially longitudinally, year over year, you can really see some remarkable trends and some super of deep insights that I'm sure become such a platform. Maybe you can talk to us more about this Congressional Family Business Caucus that you have put together, because I can just see the power in that voice in Washington.

Pat Soldano

Yeah, we're very excited about it. In a little over 18 months, we have 42 members of this Congressional Family Business Caucus. While it is Congress's caucus, and they remind us of that, we do all the heavy lifting. We do all the work, we do the organization. If there's any funding, we do all that, they show up. But we're thrilled to have them show up because that's the purpose, is for family businesses to have a voice. So it is, again, bipartisan. It's an educational caucus, which is really important because, quite frankly, we wouldn't have half Democrats, almost half Democrats, if it was a policy caucus. But as an educational caucus, it's been a little easier. It's still really hard to get people to do something in DC because they're always worried they're going to be criticized no matter what it is. So many of our family business owners reach out to the members of Congress to get them to join this caucus. The caucus meetings, we have three a year. We had three last year. We've had our first one this year. We bring family business owners to DC so they can tell their story. Members of Congress come in the room.

Pat Soldano

They talk as well as they hear the stories of the family business owners. And this year, we're having themes to our caucus. So we had workforce issues as the theme of this first caucus meeting on March 12. And so we brought employees of those family business owners, as well as the family business owners, some of them, to DC to talk about what their workforce issues were. And Probably not a surprise to you that the number one issue is hiring, retaining, recruiting talent. And the government can help or hurt with that. And even to the extent of things like immigration policy can it affect that hiring, retaining. So we heard from the employees. We heard from the employees, we heard from the family business owners. We heard from six members of Congress. We were very excited to have Democrats and Republicans in the room. And it's really growing because they're now talking to each other about it. It's the first time I really feel like family business owners understand their voice. Then it's not just the meeting. We record the meeting, audio and video. We send it out on social media. We post it on YouTube.

Pat Soldano

We send it everywhere we can possibly send it, and we show it, and we remind members of Congress over and over again about it. We have four wonderful co-chairs, two Democrats, Cuellar of Texas and Schneider of Illinois, and two Republicans, Claudia Tenney of New York and Arringon of Texas. And they've been to the caucus meetings, and they've been supportive. We really appreciate it.

Kirby Rosplock

Well, it's incredible, just the growth and the work. Tell us more about if people want to sign up, if they want to join either Family Enterprise USA Policy and Taxation Group, maybe you can just give us a little bit more about what that means to be a member.

Pat Soldano

I'd love to do that. If you're a family business and you want to participate in our work and support what we're doing, they should go to our website, familyenterpriseusa.com, and they just donate. They become a member, and we have various levels of membership. If you want to come to DC and tell your family business story, we'd love to do that. If you're willing to do a video with me and tell your family business story, we have over 25 of those on our YouTube channel and on our website. I love to do that as well. If you're a family office or a successful individual and you want to support the work of Policy and Taxation Group, same thing. Go to that website, policyandtexationgroup.com, and be a supporter and support that we're doing there as well. If you want to be more engaged, which is really what we encourage, and come to DC, we're there at least four times a year for the caucus meeting and for supporters meetings, members meetings. Please reach out to us because we really want your voice.

Kirby Rosplock

I think it's such a valuable exercise having been to DC a couple of times. And Pat, I think both times, you were right there championing these meetings and a lot of these discussions. There's nothing more powerful than actually sitting down with members of Congress, telling the stories that bend their ear and also get them to take notice of how what they do in the beautiful capital building impacts the rest of us working in our businesses and our enterprises. And there's a disconnect, right? Unless those lawmakers, those Congressional makers are also in family businesses, they may or may not have any real direct connection. So when you get to meet face to face, I think it's a very powerful opportunity. And it's a really smart thing to do to get connected to the way our government works. And I mean, voting is one piece of it, but there's a lot that we can all do to be actionable in our own way if we're passionate. And I definitely feel that these two organizations are making a huge huge difference for a constituency that is massive, right? But probably very underrepresented compared to all the other types of lobbies that are out there.

Pat Soldano

Well, thank you for that. We believe that, and everyone that's ever done hill visits with us, we do the caucus meeting, but we also do individual hill visits with everyone that comes. They always get inspired and tell me how much they love it, and most of them end up coming back. So you're absolutely right. It really is a wonderful experience. It's I've been doing it for 30 years, and I keep going back and doing it. And I think it does really make a difference. And I think that is people don't think they can make a difference today. And I'll tell you from someone who's been doing it forever, while it can be very frustrating I get it. Our process is frustrating. It is still the best in the world. And the fact is, you can talk to your member of Congress. You can still write a letter, you can still send an email, you can call, in some cases, text. You really need to reach out to them because they want to hear from constituents. They want to know what you are thinking of and what your concerns are. It might be really surprising.

Pat Soldano

Sometimes we set up a meeting with a staff member and the member of Congress walks in because he wants to hear from you. So I just really encourage people to do that, to go to town hall meetings. If you're going to a fundraiser and you should be doing those, you should go up to the member and talk to them. Never go to a town hall meeting or a fundraiser or any event where there's a member of Congress in the room and not take the opportunity to speak with them. I mean, be polite, be short, but that's what you're there for. And so really do that. And I think a lot of people don't think it matters or they don't care. And I will tell you that's just wrong. They do And those really, I think, are very powerful when you go to those events and you talk to members of Congress.

Kirby Rosplock

I couldn't agree with you more. And I just want to echo the fact that you are a bipartisan organization. You welcome all the diversity of voices And so it shouldn't be viewed as, oh, you're just a Democrat or you're just a Republican. No, you're here to serve, right? This whole larger family business demographic. And we know that family businesses are Republicans and Democrats. So we have to make sure that this is being heard across the aisle and really landing as a major important initiative that has to wake up Congress, because there are real pain points. And if we wound, let's call it one of the biggest economic engines in our country, we're going to have bigger problems. So I love that you bring this key awareness, and you're such a passionate advocate, and you have brought so much leadership back to this space. I can't even stress my gratitude because I know it's backbreaking, and I know it takes lots of phone calls, lots of energy, and lots of engagement from so many constituents to make this work.

Pat Soldano

Well, thank you for that. We really appreciate it. It's always nice to be appreciated, believe me, because it is hard work. But without the family business owners and the family offices and the successful individuals in this country, we couldn't get it done. But thank you. Appreciate your support. Absolutely.

Kirby Rosplock

Well, I'm sure there's going to be a lot more. We're going to link to this podcast so folks can find their way to both websites and learn more about both organizations, how they can support and sign up to be members, as well as more about the new executive summary. I'm sure there might be recordings of webinars and more in-depth details on all the nuances of the study. But I just want to thank you again for being on the Tareman Learning podcast and being such an incredible leader and representative in this family business and family office realm.

Pat Soldano

Well, thank you, Kirby. Thank you so much for the opportunity. We really appreciate it. And again, we really appreciate your support as well.