Ranchers, farmers brace for Obama’s ‘death tax’ impact

November 17, 2012 4:52 pm  

(Fox News) – Rancher Kevin Kester works dawn to dusk, drives a 12-year-old pick-up truck and earns less than a typical bureaucrat in Washington D.C., yet the federal government considers him rich enough to pay the estate tax — also known as the “death tax.”   And with that tax set to soar at the beginning of 2013 without some kind of intervention from Congress, farmers and ranchers like Kester are waiting anxiously.

“There is no way financially my kids can pay what the IRS is going to demand from them nine months after death and keep this ranch intact for their generation and future generations,” said Kester, of the Bear Valley Ranch in Central California.   Two decades ago, Kester paid the IRS $2 million when he inherited a 22,000-acre cattle ranch from his grandfather. Come January, the tax burden on his children will be more than $13 million.   For supporters of a high estate tax, which is imposed on somebody’s estate after death, Kester is the kind of person they rarely mention. He doesn’t own a mansion. He’s not the CEO of a multi-national. But because of his line of work, he owns a lot of property that would be subject to a lot of tax.

Our number one goal is to repeal the estate tax, to get rid of it, not have it for every generation, when I die and my kids die and so on,” he told Fox News. “For everyone to have to re-purchase the ranch or farm over and over for each generation, that’s inherently unjust. So what we’re doing is asking our politicians to understand that and repeal the estate tax.”   That, however, is unlikely.

Currently, the federal government taxes estates worth $5 million dollars and up at 35 percent. When the Bush-era tax rates expire in January, rates increase to 55 percent on estates of $1 million or more. While some Republicans want to eliminate the death tax entirely, President Obama has proposed a 45 percent rate on estates of $3.5 million and up.

“The idea behind the estate tax is to prevent the very wealthy among us from accumulating vast fortunes that they can pass along to the next generation,” said Patrick Lester, director of Federal Fiscal Policy with the progressive think tank — OMB Watch. “The poster child for the estate tax is Paris Hilton — the celebrity and hotel heiress. That’s who this is targeted at, not ordinary Americans.”

But according to the American Farm Bureau, up to 97 percent of American farms and ranches will be subject to an estate tax where the exemption is set at $1 million. At that rate, the federal government will pocket $40 billion in 2013 and up to $86 billion in 2021. That contrasts with just $12 billion this year.   Many Democrats argue the tax promotes equality among classes, especially in capital gains — or stocks passed from one generation to another. Since stocks are only taxed when they are sold, the government can’t profit from long-term investments without the estate tax.   “Very large portions of very wealthy estates are tied up in stocks and they have never been taxed,” said Lester. “The estate tax is one of the ways we make sure the wealthy pay a little bit more as an overall share of their wealth and income compared to low-income individuals.”

Many Republicans argue the opposite. Because the estate tax falls on assets, they say it hampers investment by reducing incentives to save and invest. A pending estate tax could become a disincentive to invest in an otherwise viable business, forcing older people to liquidate or shift resources out of an ongoing business and into a trust or tax-free investment.   “We’re not millionaires in the terms of making a million dollars a year,” said Kester who lives in a modest home and whose family — not outsiders or a corporation — runs his ranch. “I have a half-a-million dollars in soil.”

Kester can’t spend it, without selling land. But by selling the land, each year the ranch would become less viable.   The estate tax dates back to 1916 when then-President Woodrow Wilson imposed the tax of 1 to 10 percent on the wealthy because World War I reduced federal government revenues.

Under Franklin Delano Roosevelt, the tax rose to 77 percent, as Congress tried to prevent wealth from becoming concentrated among a few powerful and super-rich families.   Ironically, many nations historically more concerned with class and wealth — namely Russia and China — have since abandoned their estate taxes.

http://www.foxnews.com/politics/2012/11/16/ranchers-farmers-brace-for-death-tax-impact/

Attack on U.S. grid worse than Hurricane Sandy
Rush: Change The Culture, Change The Country - VIDEO

Top Stories

Bernie Sanders Wants To Bring Back A 90 Percent Tax Rate (Daily Caller) - Vermont Sen. Bernie Sanders wouldn’t mind hiking taxes to an eye-popping 90 percent for wealthy Americans. The socialist lawmak...
Huckabee Defends ‘Fair Tax,” Says It Won’t Hurt... (Newsmax) - Former Arkansas Gov. Mike Huckabee on Sunday defended his "fair tax" plan and other positions in an interview with his former employer, Fo...
Oregon to Test Pay-Per-Mile Tax (AP) - Oregon is about to embark on a first-in-the-nation program that aims to charge car owners not for the fuel they use, but for the miles they dri...
Bono: U2 Has a Right to Avoid High Tax Nations (CNS News) - U2’s lead singer Bono defends basing some of the band’s business affairs in the Netherlands saying, “it is our sovereign right to b...
Supreme Court Strikes Down Maryland ‘Double Tax’ Law (Newsmax) - The Supreme Court on Monday struck down a Maryland tax that has the effect of double-taxing income residents earned in other states. Th...
Feds Collect Record $1,891,601,000,000 in Taxes Through April (CNS News) - In constant 2015 dollars, the $1,891,601,000,000 that the federal government collected from October through April in fiscal 2015 was $1...

Comments


Please help us stay spam-free. Mouse over a spam post and click the X to report spam.