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Do You Support A Repeal Of The Death Tax?

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Sen. John Thune (R-SD) and Rep. Kevin Brady (R-TX) have re-introduced legislation to permanently repeal the federal estate tax.

On June 19, Sen. John Thune (R-SD) and Rep. Kevin Brady (R-TX) re-introduced a bill to permanently repeal the federal estate tax. This move follows the January decision to make permanent the federal estate tax with an exemption of $5.12 million/individual and a tax rate of 40% for amounts over the exemption.

While that move may have been a step in the right direction, it certainly doesn’t help the farmers and ranchers who may be asset-rich but cash-poor. That’s why I’m pleased to hear about this new legislation.

“We don’t believe death should be a taxable event,” says Thune, chairman of the Senate Republican Conference and member of the Senate Finance Committee. “Imposing a tax rate as high as 40% is not just bad for our economy but is bad for the families who have saved and built through their lifetimes and also created jobs in the process. One-third of family businesses that owed the death tax actually owed more in taxes than what they had in liquid assets.”

“What kind of government swoops in upon your death and takes nearly half of the nest egg you’ve spent your entire life building?” asks Brady, chairman of the Joint Economic Committee and a senior member of the House Ways & Means Committee. “The Death Tax remains the number-one reason family-owned farms and businesses don’t survive to the next generation, and it’s time to end this immoral tax once and for all in America.”

Read the entire press release here, and listen to Thune’s comments below.

What do you think about the current estate tax levels? Do you think a permanent repeal will help producers? What are the chances of this bill passing? Discuss the pros and cons in the comments section below.

 

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Discuss this Blog Entry 22

on Jul 11, 2013

Do you favor the return of the Robber Barons? Do you favor putting even more power in the hands of the ultra rich? Do you favor making the voice of the family farmer even more irrelevant in Washington? The repeal the estate tax, retain the loopholes for the rich and retain the most lopsided tax structure with the greatest bias toward the few in the nation's history. And let's let Beef Mag give us some data, how many family farmers can't pass on the farm to their kids under the new $5mm/person ($10mm for the family) exemption, given all the other techniques that can be employed during their lifetime to reduce or eliminate estate taxes. It's cute to call it a "death tax", it's always popular to say eliminate any tax, but let's do our homework, tell readers why the estate tax came into existance to start with, tell readers how many of them are even impacted any longer by the new limits.

Bob (not verified)
on Jul 11, 2013

It is rather inefficient to employ the "other techniques" throughout one's lifetime. This takes away from the owner's valuable management and work time throughout his/her lifetime. It also employs accountants and lawyers throughout the owner's lifetime. If one is expected to use these techniques to avoid the estate tax, why not just not have an estate tax?
,

CARLTON (not verified)
on Jul 11, 2013

PLEASE USE PROPER TERMINOLOGY - THIS IS AN ESTATE TAX, NOT A DEATH TAX. TRYING TO INFLAME PEOPLE WITH EMOTION-LADEN WORDS IS CHILDISH.

Bob (not verified)
on Jul 11, 2013

Okay---so it is an estate tax payable on death.

Caps averse (not verified)
on Jul 11, 2013

So is using all caps in a comment. It happens on your death; it's a death tax. Your estate has been taxed throughout your life.

Jenn (not verified)
on Jul 11, 2013

exactly.

old rancher (not verified)
on Jul 11, 2013

With proper planning, a great deal of the estate taxes can be avoided. The exemption is $10MM per family and $26,000 per year per child can be given on top of that. In addition, major discounts are available if one is giving an undivided interest in the land.

There is no virtue or public good in land staying in a family's hands. When people who don't plan lose a ranch, it opens opportunities for young aggressive farmers to buy and there is a value to the public good in that.

We are going to have to pay taxes to support the government. Paying them after we are dead with those who don't plan paying a disporportionate share is not all bad.

Anonymous (not verified)
on Jul 11, 2013

Simple -the Federal Government has no entitlement to estates following death. Why do we feel it is ever acceptable for the Government to tax an estate following a death? One of the most ridiculous taxes in the history of our country.

Jenn (not verified)
on Jul 11, 2013

Amen.

Jenn (not verified)
on Jul 11, 2013

Wow. Seems to me like both the above commenters are missing the point. I think it's a great idea.

Caps averse (not verified)
on Jul 11, 2013

Old rancher: Love the statement "there is no virtue or public good in land staying in a family's hands." Are you trying to make a veiled argument for socialism? Sorry; not buying it.

on Jul 11, 2013

Why are people so greedy for someone else's money? Being in a working family, the children have put as much time into the farm, ranch, or other business as the parents have. Why should they be taxed on money they have earned...again. It is rare that children just sit around, not contribute to the business and are given millions. If they had no interest in the business they would just sell it anyway or drive it into the ground. When I drive down the freeway and see these massive electronic signs that tell me how many minutes it may take me to get to the next exit, I think its about time the government had less money to spend and borrow. Why should the rich be asked to pay a dime more than the poor? They pay more for the same service. If you want to boost the economy, tax the lower wage earners more and just maybe they will get motivated to put in the extraordinary effort it takes to make a lot of money. Flat tax on money spent seems the way to be most fair.

Anonymous (not verified)
on Jul 27, 2013

Amen....flat tax on money spent is the most fair to all.

Anonymous (not verified)
on Jul 11, 2013

It should be repealed but as that is not likely to happen, working on the exempt amount and rate, it started at 1%, and a very low rate for land should be promoted. Although this could have the unintended consequence of higher land prices through money parking by very wealthy non ag people. In my area 400 acres of pasture has me about at the limit of the exemption and there is no adjustment for high land values in certain areas. Not an area you would now pick to start a ranch, but family and friends are here. Old Rancher sounds like a chauvinist who assumes every rancher has a wife, and the amounts are not quite correct. And anyone who uses the term "rule of thumb" should look it up first.

been there done that (not verified)
on Jul 11, 2013

Doubt we can get it repealed, particularly when the bureaucrats are looking for more money (as always). How about making the tax a lien (low or no interest) to be paid if and when the enterprise is sold?

Banker Bob (not verified)
on Jul 11, 2013

I have been banker for 35 years and have spent most of my career financing small business and farm/ranch operations. I have yet to see a thriving business with solid family management sell because of estate taxes. The comment on methods to limit estate taxes is absolutely correct. (for a primer on what a good estate plan can save in estate taxes, Google the Pohlad estate v. IRS) Businesses/farms don't make it to the next generation because of management inability of family members or heirs with different interests. Only an estate from a person that was completely incompetent pays the highest tax rate.

The political hype that the estate taxes are killing agriculture is just that; hype. It plays well but, the reality is far different.

Charles Antle (not verified)
on Jul 12, 2013

Listen to the Banker. Do not think these replies represent the true feelings of farmers as a whole, not even of your readers as a whole. They are the opinions of a two self selected groups.

on Jul 11, 2013

Estates are created with after tax money. Why should it be taxed again?

A David (not verified)
on Jul 12, 2013

One huge unintended consequence of repeal will be the loss of stepped up basis which had significant benefits for a possible sale or transfer to new heirs. This will result in higher taxes for those inheriting below the 5,000,000. Think it all through before jumping to conclusions.

Terry Church (not verified)
on Jul 14, 2013

I personally have never believed in the Death Tax. Even though my or my families assets are not at the set tax levels. I believe that the tax can and will hurt some family businesses so badly that may have to sell out or become no longer to be. Our government needs to learn to spend within their means (as we have too) instead of increasing taxes or creating a new tax and putting more of a burden on the people.

Anonymous (not verified)
on Jul 18, 2013

I do support the repeal of the death tax

Anonymous (not verified)
on Jul 27, 2013

I also support the repeal of the death tax or estate tax.

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A fifth-generation rancher from Mitchell, SD, Amanda grew up on a purebred Limousin cattle operation in which she and husband Tyler are active. She graduated with a degree in agriculture journalism...

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