What Should The Estate Tax Level Be?

The current estate tax law calls for a $5-million individual exemption and a 35% tax rate. Unless Congress acts before Jan. 1, that will fall to a $1-million exemption and a 55% tax rate. This week’s online poll question is: “What’s the ideal estate tax rate?”

Please vote and leave your comments in the comment section.

Discuss this poll 29

Anonymous
on Dec 13, 2012

I,m in favor of the 5 million because I,m afraid without some possiblity of tax there would be no bases change. High capital gain tax could keep some land in hands of family members who don't want to care for it just captalize on it.

Anonymous
on Dec 14, 2012

Everyone should be paying an estate tax,since the goverment is spending more money than it takes in somebody has to pay the bills. People should pick from two options either tell the government to spend less or pay more taxes. If you want to pay more taxes the option should be pay now or pay later. Why not pay your tax bill that you owe when you die? You enjoyed the services the goverment provided for you when you were living. You can't have your cake and eat it too. Unless you think freeloading and passing your debts onto the next generation is ethical.

Anonymous
on Dec 12, 2012

Return on equity by sector:
http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/roe.html

Long term returns to ranch investments are less than 1/10 of typical businesses at best, McGrann showing 1.6%.
http://agrilifecdn.tamu.edu/coastalbend/files/2012/06/Making-a-living-9-...

Anonymous
on Dec 11, 2012

The first estate tax bill is on-line here - http://www.givemeliberty.org/docs/TaxResearchCD/TaxActs/IncomeTax1916.pdf (linked from http://en.wikipedia.org/wiki/Revenue_Act_of_1916)

Exemption of $50K in 1916 dollars, one 1916 dollar = $21.22 2012 dollars - http://www.bls.gov/data/inflation_calculator.htm
so first $1.061M of estate in current dollars was exempt from estate tax.

The estate tax was 1% on next $50K graduated in 9 steps to %10 tax over $10M, which would be an estate over $212,000,000 today. (page 777)

A big problem is that the thresholds for tax steps, such as the alternative minimum tax, aren't indexed for inflation but are irregularly tweaked by legislation.

Because the rates of return to capital assets vary at least 20 fold across industries with cow-calf agriculture typically being on the bottom, the only fair way to impose an estate tax is to index it by the nature of each particular capital asset in the estate.
http://bea.gov/scb/pdf/2011/06%20June/0611_domestic.pdf

Anonymous
on Dec 9, 2012

Everything that has been earned, Uncle Sam has already taxed once, why does the government have the right to tax it again?

Anonymous
on Dec 8, 2012

Then there are the states that 'piggy-back' and estate tax on top of the federal Estate tax. Maryland is one of them. No wonder farms are blowing away. How much profit would this farm have to produce to pay that bill that we've been paying every 20-25 years or so as the old generations pass on and the next tries to keep the farm a farm?

Anonymous
on Dec 8, 2012

This is legal steeling by the goverment..

Anonymous
on Dec 7, 2012

I can see a tax if land is sold, but not when it is passed on. Bet the big shots in DC. get around it.

Anonymous
on Dec 7, 2012

The estate tax is almost never "double taxation". With large land holdings especially, it is almost all and always "appreciation" unrealized capitol gain, not the result of your effort and not something you earned. The inheritance tax is the only way a tax can be collected on that appreciation. The local real estate taxes and yearly income taxes and FICA are separate matters entirely.

Anonymous
on Dec 11, 2012

You couldnt be more wrong. Most apreciation is the result of monitary policy and the devaluation of the dollar. The result is inflation. At the end of the day an acre of land is still just an acre of land. You (via the government) have no claim or right to it due to the missfortune and the mortality of the owner.

Anonymous
on Dec 9, 2012

I don't disagree with your appreciation theory so whats wrong with the government waiting until its sold and collecting capital gains vs forcing liquidation of a family enterprise because the senior dies?? I also take issue with your premise that its not the result of your effort or something you earned. Most of us have spent a lifetime
sacrificing and working long days to build and improve our operation for little immediate compensation other than being able to pass on a lifestyle to our heirs. I for one resent the idea that the government can come along and take away a lifetime of sweat equity because land values happen to have appreciated over the years.
The death tax is the surest way to eliminate once and for all the family ag enterprise and transform our nation into a land of corporate agriculture.

Anonymous
on Dec 7, 2012

While I can see where you're coming from, I feel like you don't entirely understand the whole impact that the tax will have. The land value is appreciating faster than the agricultural value of the property (the land become worth more than what it could produce)

I thinks some tax is okay, but at the rate that's on the other side of the fiscal cliff, farmers and ranchers couldn't survive.

When a family now tries to pass down the family business (farm or ranch), the descendant that is to carry on the operations is expected to pay 55% the over inflated fair market value of that business to continue doing business. Farmers and ranchers are asset rich and cash poor. You don’t see me in name brand clothes driving new tractors and cars. The cash value of the land from the “look at me! I’m wealthy” standpoint is worthless. I could care less if my ranch was worth 5 million dollars or one cent, it means nothing to me, I’m never going to sell it. It was worth a fraction of that when my family started it. If your income was around $90,000 a year to support two families, would you be going out and buying a house that cost 2.2 million dollars? No, because you can’t afford it. So how do they think a ranching operations worth 5 million dollars with an income of $90,000 to support two families can afford to pay 2.2 million in taxes over 15 years (that’s around $147,000 per year) and survive?

I've written more on the subject at my blog if you'd like to comment with your opinions I welcome that.

http://agsqueakywheel.wordpress.com/

I'm on twitter too, @agsqueakywheel

Anonymous
on Dec 7, 2012

The Estate Tax is a tax on things that has had tax paid on them time and time again. You pay tax when you buy something, then you pay property tax every year there after. And with the Estate Tax your family is paying a tax just because you died. Tax to Death is a proper term for the Estate Tax. The Government doesn't care about the burden they put families under. In some states if you sell property at a higher price than what you paid then you pay another tax even if you are selling to settle your Estate Tax. Tax Tax Tax, where does it end? Ever?

Anonymous
on Dec 7, 2012

This property was paid for with after tax dollars. To tax it again is double taxation and unfair. Cut government spending. I see very little benefit from my tax dollars.

Anonymous
on Dec 7, 2012

There has been no tax paid on the true value of many estates. Property has appreciated in value without being taxed. There needs to be reasonable taxes on this appreciation if the estate is disolved or sold. I think the $5 million 35% is reasonable. Many corporate stokholders have stock that is worth many times its cost, there needs to be some tax system to compensate for this.

Anonymous
on Dec 7, 2012

I would beg to differ, your property tax is based on the value of the land....

Anonymous
on Dec 7, 2012

Estate taxes are one reasonable way to keep the rich from getting ever richer and funding government. Believe it or not: Increasing wealth at the top and smaller government are doing harm.

Anonymous
on Dec 8, 2012

What planet are you from? Tax and spend policies of Washington have brought is country to its knees. With no recource, it is to spend so one elses money ! If it was't, we wouldn't have a 16 trillion dollar deficit.

Anonymous
on Dec 7, 2012

Estate tax is no more than confisacation of private property, something that our present socialist administration is highly in favor of doing so we will be a fourth world nation. Policiticans have long ago forgotten that they are a liability of ours on the tax roll,not an asset, as is anyone employed in any government job. We owe them nothing other than monies to keep the goverment runing efficiently and not be overbearing as is now. By doing away with the estate tax would be a major psychological blow to their thinking and agenda.

Anonymous
on Dec 7, 2012

Don't think we can sell "no estate tax". I feel indexing is critical but I would like to see taxes structured so they do not force a fire sale; e,g,, filed a a lien only to be paid if business is sold.

Anonymous
on Dec 7, 2012

I voted for the 5M and 35 %rate. I live in Montana on a ranch that has been in the family for 108 years. Most ranches in this state are sold to out of state investors buyers. One recently sold for 132 million. It controlled 20 miles of the sun river. Most of the times the first thing a buyer does is post no hunting, fishing or trespassing signs. Next is an attempt to close all roads thur the property. As a life long rancher it may seem strange to many but I do mot see the case for estates of this size to pass to heirs with no tax. Just my 2 cents.

Anonymous
on Dec 7, 2012

Why is it that politicians think they can take so much of ones lifetime work after already being taxed heavily on that achivement. A persons labor is his own. To work and save and then have so much taken upon death is nothing more that servitute. Politicians do with pen and paper and call it legal while if the same was done in the private sector, it is called theft. Why do we put up with it? Who do they think will be the producers, once they take the incentive out of production?

Anonymous
on Dec 7, 2012

If the farm is continued to be used for agriculture it should not be taxed as if were a burdin on the other tax payers in this country. The real farmer needs all the help he or she can get to remain a farming.

Anonymous
on Dec 7, 2012

Trying to make a living farming has alway been a major challenge. Taxes. insurance, labor and long hours are not very rewarding after generations of hard work. Estate taxation is another nail in the farmers coffin.

Anonymous
on Dec 7, 2012

There is no valid reason, other than gov't greed, for taxing an estate that was built with earnigs from a business that has paid taxes, income, sales, ad valorem, FICA, etc, etc., for the life of that business.

Anonymous
on Dec 7, 2012

The money has already been taxed once that is enough.

Anonymous
on Dec 7, 2012

congress had better get off thier bias party line way of thinking and start representing the people

Anonymous
on Dec 7, 2012

There should not be an estate tax, it is double taxation and only used as a means to confiscate personal assets that should rightfully belong to the beneficiaries.

Anonymous
on Dec 7, 2012

No one should have to buy back what they already own.

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