The number of farms on which estate tax is owed when the owners die has fallen by 82 percent since 2000, to just 300 farms, as Congress has more than doubled the threshold at which the tax applies, the Congressional Budget Office said in a report released last week.
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. Advocates of repeal have begun showing commercials criticizing senators who oppose repeal, like Maria Cantwell, Democrat of Washington. Many of the criticisms focus on a supposed threat to family farms.
The estate tax raised an estimated $23.4 billion last year. Repeal would shift part of the burden of taxes off the fortunes left by the richest 1 percent of Americans, some of whose fortunes were never taxed, onto the general population. The lost revenue could be made up in three ways: through higher income taxes; reduced government services; or more borrowing, which would pass the burden of current government spending to future generations.
The above is from David Cay Johnston's "Few Wealthy Farmers Owe Estate Taxes, Report Says" in this morning's New York Times.
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