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Wednesday, June 28, 2006
Estate Tax Update
BNA confirms an earlier rumor that Senate Majority Leader Bill Frist (R-TN) won’t bring estate tax repeal reduction to a floor vote. The Republican leadership in the Senate couldn’t garner enough votes to end debate on decimating the estate tax - Frist needs 60 votes to bring a vote to the floor.
Referring to his intention to raise the issue again Frist said in a statement, "the Senate will vote on a permanent reduction to this tax--a tax that destroys small businesses and family farms."
Oh, if only we could have a debate on the merits of the estate tax and not resort to rhetorical overstatements and half-truths the likes of which Frist throws around in lieu of reality-based arguments. The fact is the estate tax affects a very, very small number of family farms.
But don’t take my word for it, the American Farm Bureau Federation, which lobbies mightily for estate tax repeal can’t name a single family farm that had to be sold to be pay estate taxes.
David Cay Johnston reporting in the New York Times on April 8, 2001 (sorry, no link):
But in fact the Riekenas [family farm owners] will owe nothing in estate taxes. Almost no working farmers do, according to data from an Internal Revenue Service analysis of 1999 returns that has not yet been published.
Neil Harl, an Iowa State University economist whose tax advice has made him a household name among Midwest farmers, said he had searched far and wide but had never found a case in which a farm was lost because of estate taxes. "It's a myth," Mr. Harl said.
Even one of the leading advocates for repeal of estate taxes, the American Farm Bureau Federation, said it could not cite a single example of a farm lost because of estate taxes.
FactCheck.org:
Of the 440 taxable family farm and business estates in 2004, two out of five paid an average rate of only 1.6 percent Heirs who agree to keep the farm or business assets within the family for 10 years after death can reduce the taxable amount of the estate by 40 percent to 70 percent. And if the farm or business is at least 35 percent of the gross value of the estate, payments can be spread out over 14 years.
The Center on Budget and Policy Priorities on a CBO report on the estate tax:
The CBO report found that if the current exemption level of $2.0 million had been in place in 2000, only 123 farm estates and only 135 family-owned businesses nationwide would have owed any estate tax. The number of taxable farm estates drops to 65 nationwide at a $3.5 million exemption level, the level that takes effect in 2009. The number of taxable family-owned business estates falls to just 94 under the $3.5 million exemption.
[...]
The CBO report also found that of the few farm estates that would owe any estate tax, the vast majority would have sufficient liquid assets (such as bank accounts, stocks, bonds, and insurance) in the estate to pay the tax without having to touch the farm. For instance, at a $2 million exemption level, only 15 farm estates in the entire nation would have owed estate taxes in 2000 that exceeded the liquid assets in the estate; at a $3.5 million exemption, only 13 farms would have faced such a constraint.
And a big thanks to all of you who took action and let your sentators know what you think about estate tax repeal!
Posted by Craig Jennings
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