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Thursday, October 04, 2007
More Famous Than Harry & Louise?
Later today, the Senate Finance Committee is expected an amendment sponsored by Sen. Jon Kyl (R-IA) that would cut the federal estate tax, claiming that the tax is hurting family farms by forcing family farmers to sell their farms in order to pay the tax. We'd like to see one example of a family having to sell their farm in order to pay for the estate tax.
According to the Emrgency Campaign for America's Priorities, in 2001, the pro-repeal American Farm Bureau could not provide the New York Times with a single example of a family having to sell its farm to cover its estate tax liability -- and that was when the exemption was about 30 percent of what it is today.
CBO estimates that each year, out of around 2.5 million people who die in the entire country, only about 120 are farm owners who owe estate taxes. Each year, only 15 of the farms would not have enough liquid assets to pay the tax -- about .003% of the farms in the U.S. As the Urban Institute points out:
Family-owned farms and closely held businesses receive especially generous treatment under the estate tax. Farmers and small business owners may reduce the value of their real estate using a special formula as long as their heirs maintain its use as a family-owned farm or business and do not sell it to a nonrelative for at least 10 years. Special use valuation can reduce the value of the real property portion of most farms by 40 to 70 percent of its market value. In addition, estates in which farm and business assets make up more than 35 percent of the gross estate may pay their estate tax in installments over 14 years at reduced interest rates.
See also: CTJ's Do Family Farms Need More Estate Tax Breaks? and the most recent state-specific estate tax numbers.
I think if Sen. Kyl could produce one American family that had to sell the farm to pay its estate taxes, they'd be more famous than Harry and Louise.
UPDATE: Sen. Kyl has just withdrawn his estate tax amendment .. for now.
Posted by Dana Chasin
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