One variation or another of the estate tax repeal legislation now wending its way through Congress has popped up and been shot down any number of times in recent years.
The ongoing efforts are always couched in terminology implying a primary, noble goal of preventing thousands of family farms from being lost to the tax collector.
Stories are legion of grieving widows and sons/daughters forced to sell off farms that had been in their families for generations in order to pay the burdensome estate tax. The chambers of Congress have echoed with impassioned speeches bemoaning these tragic episodes — which the media have further perpetuated.
Thing is, nobody seems able to substantiate that there is today a significant problem of farms being lost because of the tax. Says Neil Harl, Iowa State University ag economist and an expert in estate tax planning for farmers: “This is a myth that has been well-spun.”
In fact, say a growing number of opponents of repeal, under current, more generous tax rules, only a handful of the very largest farming operations would conceivably be subject to estate taxes, and anyone in that category would have made adequate provisions through insurance and other measures to cover any tax liability.
A recent Congressional Budget Office study reported that since Congress has more than doubled the threshold at which the tax applies, the number of farms on which estate tax was owed when the owners died fell by 82 percent since 2000, to just 300 farms. Maybe.
All but a handful (less than 30) had enough liquid assets to pay the taxes owed, the CBO said, and if all the facts were known, the number might actually be zero.
How’s that for irony: A tax repeal measure being promoted because of a supposed threat to family farms, when in fact few, if any, farmers are affected?
So then, who stands to benefit from this measure if Congress succeeds in ramming it through?
“Multi-millionaires and billionaires — fewer than 1.5 percent of estates each year,” writes Chuck Collins, senior fellow at United for a Fair Economy, an independent national organization promoting awareness of the damaging consequences of concentrated wealth and power.
Collins and Bill Gates Sr. (father of Microsoft mogul Bill Gates, the world’s richest man) are co-authors of a book, “Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes.”
With the national debt soaring and the cost of U.S. military involvements skyrocketing, they say, “If there ever was a time to limit tax breaks” for these super-wealthy, “this should be it.”
Repeal would cost almost $1 trillion over the next 20 years, Collins and Gates say. “Giving such a tax break to wealthy heirs would only shift the burden” to everyone else, including the farmers that repeal would supposedly help.
Further, a House Ways and Means Committee study points out that the repeal legislation substitutes a carryover basis regime that “would place burdensome compliance and reporting requirements on all estates with gross assets of over $1.3 million.” An estimated 70,000 estates would be subject to the rule, including a lot of farm operations.
e-mail: [email protected]