December 13, 2012
Taxing the Undead

Here they come again, hordes of undead gentleman farmers lurching toward Congress:

A significant increase in the federal estate tax is possibly just days away. And without quick congressional changes, the farmers say, their heirs could face crushing taxes that could force the breakup of their decades-old family farms…

“Death should not be a taxable event,” said U.S. Rep. Sam Graves, Republican of Missouri. “At the very least we need to increase the exemption and drop the tax rate. We need family farms more than ever, and the death tax as it stands right now will force too many families to sell their land.”

Sen. Roy Blunt, also a Missouri Republican, said he faces estate tax concerns across the state.

“Missouri has 100,000 family farms,” he said. Of those, “15,000 farms would be impacted (by the new rates) ... More often than not, that means the family will have to sell the farm to save the farm.”

And here is David Kay Johnston, writing in the New York Times back in 2005 :

The number of farms on which estate tax is owed when the owners die has fallen by 82 percent since 2000, to just 300 farms, as Congress has more than doubled the threshold at which the tax applies, the Congressional Budget Office said in a report released last week.

All but 27 farmers left enough liquid assets to pay taxes owed, the budget office found, although it hinted that the actual number might be zero. The study examined how much in cash, stocks and bonds these farmers left to pay estate taxes, but the report noted that no data existed on how much life insurance the farmers had put into trusts. Virtually all wealthy farmers own life insurance in trusts, say estate tax lawyers who specialize in working with farmers…

President Bush, the American Farm Bureau Federation and the National Cattlemen's Beef Association have asserted that the estate tax is destroying family farms. None, however, have cited a case of a farm lost to estate taxes, although in June 2001 Mr. Bush said he had talked to such farmers.

The number of farms subject to the estate tax, always a minority, has fallen because Mr. Bush persuaded Congress to raise the threshold for estate taxes to $1.5 million, double that for married couples, for last year and this year. With simple planning, couples with children can shield several million more dollars from the tax.

In 2000, when the threshold was $675,000, taxes were owed by 1,659 farm estates, the study found. Had the current threshold been in effect, only 300 farms would have owed any tax.

Next year, when the threshold rises to $2 million per person, just 123 farms will be subject to the estate tax, the study found. And in 2009, when it rises to $3.5 million, only 65 of the nation's 2.2 million farms will be affected, the study said.

And now me, in November of 2003 (full post here):

First of all, I would point out to Mr. Norquist’s suppositional seventy percent that it is not a death tax. The dead no longer possess their money, being dead. Lacking money with which to pay taxes, they cannot be taxed. Are we clear so far?

Nor is the estate tax double-taxation. The dead man presumably paid his taxes while still alive. But he cannot be required to pay further taxes after death on money he no longer has. Being, you see, dead.

And so the “death” tax is not levied on the dead at all, but upon the heirs of the dead. These heirs did not earn that money, nor have they ever paid taxes on it. Their inheritance is income to them, and is taxed on the same theory that lottery winnings, found money and large cash gifts are taxed.

Thus the estate tax is not paid by dead millionaires who dedicated their lives to creating jobs for their less fortunate countrymen, but rather by their fat rich kids.

Examples would be Bush the Elder, Donald Trump, Richard Mellon Scaife, and Rupert Murdoch. Other examples would be John F. Kennedy, Ted Turner, and Franklin Delano Roosevelt. Estate taxes are levied on a nonideological basis, but only conservatives whine about them.


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Posted by Jerome Doolittle at December 13, 2012 02:35 PM
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Don't these people supposedly just love Thomas Paine? Glen Beck was always swooning over him, anyway. Thomas Paine practically invented the inheritance tax in his pamphlet Agrarian Justice.


Posted by: Tim on December 14, 2012 1:13 PM

These farmers who lost the farm to estate taxes can't be dead. Read your own post. George Bush was just talkin' to 'em.

Posted by: lless on December 14, 2012 10:46 PM
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