Friday, November 10, 2017

This Year 50 to 80 Family Farms or Businesses Face Estate Tax

Most owners of family farms or businesses needn't worry about federal estate tax. Most, but not all.

The Center on Budget and Policy Priorities estimates that 50 estates consisting mostly of a farm or business will pay the death tax this year. Data from the Tax Policy Center suggest the number is 80.

Repeal of the estate tax would make life easier for those 50 to 80 families. But repeal would also allow more than 5,000 other wealthy families to retain their diversified wealth tax free.

At the moment, chances of repeal have dimmed. The House version of the tax bill leaves the federal estate tax in place for seven years, albeit with a doubled exemption. The Senate version deletes the delayed repeal.

1 comment:

Jim Gust said...

Several problems with your "myth" sources.

First, the IRS says that in 2016 there were 682 taxable estates with farm property, and more than 1,000 with farm property that were nontaxable for one reason or another. So the source for "50 to 80" seems to be pulled out of thin air.

Second, the Washington Post article posits a $10 million exemption instead of the actual $5 million exemption to get their 3.75% tax rate--typical WaPo dishonesty. They are assuming that a couple owned the farm, as well as other facts not in evidence.

Third, how many family farms were sold before death, because the family knew that it couldn't keep running the farm while paying an estate tax? That number dwarfs the number who keep the farm and decide to struggle to pay the tax, or who fund life insurance to be able to pay it. Pointing to the number who pay the tax is a transparently incomplete measure of the burden of death taxes.

The consolidation in agriculture, the death of family farms, has several causes, and the federal estate tax has been a big one--especially before 2001, when the exemption was a paltry $675,000.

Finally, the opportunity to hang an estate tax anchor around your neck for 15 years is not nearly as great a benefit as liberals seem to think. The interest rates on those taxes are killers.