All but 27 farmers left enough liquid assets to pay taxes owed, the budget office found, although it hinted that the actual number might be zero. The study examined how much in cash, stocks and bonds these farmers left to pay estate taxes, but the report noted that no data existed on how much life insurance the farmers had put into trusts. Virtually all wealthy farmers own life insurance in trusts, say estate tax lawyers who specialize in working with farmers.
These findings come as the Senate is poised to vote this month on repeal of the estate tax.
President Bush, the American Farm Bureau Federation and the National Cattlemen’s Beef Association have asserted that the estate tax is destroying family farms. None, however, have cited a case of a farm lost to estate taxes, although in June 2001 Mr. Bush said he had talked to such farmers.
The number of farms subject to the estate tax, always a minority, has fallen because Mr. Bush persuaded Congress to raise the threshold for estate taxes to $1.5 million, double that for married couples, for last year and this year. With simple planning, couples with children can shield several million more dollars from the tax.
In 2000, when the threshold was $675,000, taxes were owed by 1,659 farm estates, the study found. Had the current threshold been in effect, only 300 farms would have owed any tax.
Next year, when the threshold rises to $2 million per person, just 123 farms will be subject to the estate tax, the study found. And in 2009, when it rises to $3.5 million, only 65 of the nation’s 2.2 million farms will be affected, the study said.
The estate tax promotes income mobility and prevents the entrenchment of a permanent aristocracy, both valid goals. Repealing the estate tax brings no societal benefit, and means taxing the bottom 99% more heavily, or making me and my future children pay a debt tax.
Last year, the estate tax raised $23.4 billion. I don’t know if that statistic really applies to the estate and gift tax, or only the estate part of it. Remember, this is a tax on large gifts as well as large bequests.
And no one has yet found a single family farm lost due to the estate tax. If you know such a story, put it in the comments and get yourself famous.