[Mb-civic] Death Tax Fairy Tale:

[Lyle K'ang]

Death Tax Fairy Tale: CBO study shows most family farms don't pay estate tax



Salt Lake Tribune

Most people who work the land want to pass the family farm - and the rural lifestyle that goes with it - to their sons and daughters. Trouble is, federal estate taxes are so high that the heirs often have to sell the farm to pay them. That is one of the best arguments for repealing the "death tax."
   There's only one problem with this story. It isn't true. In fact, few family farms are sold to pay estate taxes.
   That's the conclusion of a new study from the Congressional Budget Office.
   So the next time you hear Republicans stumping to repeal the "death tax" in order to save the family farm, take that argument for what it is: a fairy tale. Yes, there may be a few rich farm families who have to pay an estate tax when grandpa and grandma pass on, but they are very few, indeed.
   The people who are selling this snake oil about the estate tax are really out to protect someone else - the richest Americans with truly enormous family fortunes, many of them hereditary. Those people - the 1 percent of Americans who own 40 percent of the nation's wealth - would be the real beneficiaries of a repeal of the estate tax, not independent family farmers.
   A tax policy that favors hereditary wealth at the expense of the lower and middle classes is the stuff of aristocracy, not the merit society that the United States promotes as part of its national identity. Yet income disparity - the gulf between the haves and the have-nots - is greater in the United States than in any of the other highly developed industrial nations of the world, including those of Europe.
   A repeal of the estate tax would only make that gulf wider, by shifting more of the tax burden to the middle class or saddling future generations with a bigger national debt.
   The reason that the estate tax does not affect many farms or small businesses is that Congress increased the credit that applies to the value of assets left at death. In 2005, that shelters $1.5 million. Only the 2 percent of estates worth more than that must file an estate tax return.
   That exemption is scheduled to increase to $2 million in 2006 and $3.5 million in 2009. Based on returns from 1999 and 2000, the CBO estimates that with the $1.5 million credit in place, only 300 farm estates would have owed tax, and only 27 would not have had the cash to pay the tax.
   So much for fairy tales. 


Lyle Kekahi K'ang, MBA/IM 
http://silomanagement.blogspot.com/
http://lyve-oasis.com