Is the estate tax killing small farms and businesses?

Efforts to repeal the estate tax (a.k.a. “death tax”) occur on an annual basis, usually around tax filing season. One year, in 2010, the estate tax actually was repealed — but then it came back again the next year. (It turned out that the taxes due at death were even more onerous for most people than with the estate tax in place.) In the meantime, Congress has increasingly cut the tax rate and boosted the exemptions, making it less and less likely that Americans would face the tax. In 2001, for instance, $675,000 ($1.35 million for couples) of an estate was exempted from the tax before a top rate of 55 percent tax rate kicked in. Now, the exemption is $5.43 million (nearly $11 million for couples) and tax rate is 40 percent on any amount after that. So the effective rate for most estates facing a tax is significantly lower than 40 percent. These exemptions have made a huge difference in terms of who gets affected. In 2000, 2 percent of estates had to pay taxes; in 2013, just 0.18 percent had to pay taxes, according to the Joint Committee on Taxation. Put another way, there were 52,000 taxable estate tax returns filed in 2000 and just 4,687 in 2013. (In 1977, by contrast, 139,000 estates had to pay tax—nearly 8 percent of deaths.) Ironically, the relatively little revenue raised by the estate tax (about $20 billion a year) has given opponents a new reason to eliminate the tax—because killing it would not make much of an impact on the budget. So, here we are, with objections still raised about the impact on farms and small businesses. As in the past, the concerns are bipartisan, with some Democrats joining the anti-estate-tax bandwagon. What does the data show?...more

The article is a back and forth on who pays and who doesn't.  In the end, the author concludes it's "a philosophical issue."  That is amply demonstrated by the farmer from Tennessee and the professor from Iowa State.  It is made clear the large increase in land values on the Tennessee farm are because of urbanization, otherwise, why would the farm owner say he wants to "maintain the farm as an example of modern agriculture within an urbanized area."?  The ag professor says this "makes no sense", that the average value of farmland in Iowa is much lower.  He then goes on to say the "super wealthy" are accumulating farm assets and are behind the "push" to kill the inheritance tax.  You can hear the envy spewing from his lips.

Not discussed in the article is the fairness of the death tax.  Why should a person pay income taxes all their life, pay property taxes on assets every year and so on, and then have to pay another tax on what is left over?  Its a tax on what's left over after taxes.

All this reminds me of my first year on the D.C. staff of Senator Domenici.  It was my first trip back to the state with him and we were hitting many of the smaller towns and rural areas.  This particular late afternoon we landed the small plane, if memory serves me right, in Fort Sumner, NM.  The pilot told us to be sure and get back before dark because there were no lights at the airport.  Domenici gave his speech and then stayed to answer questions.  

We were running late and it was my job to run interference and get us out of there.  I just about had him out the door when this physically impressive rancher grabbed me by the arm and demanded "just a minute" with the Senator.  We stopped and the rancher explained his father had passed away and now they were being forced to sell most of the ranch just to pay the inheritance taxes.  His eyes teared up when he said he had fought for his country in Korea, and now that same country was taking his family ranch away.  That did a much better job of convincing Domenici the death tax needed revision than all the issue briefs I had prepared.

Problem was, now it was dark.  The call went out, and the good folks lined their cars and pickups on either side of the runway with their headlights on, and that's how we took off that night.  I'll always remember that rancher, and those headlights.