Skip to comments.526,421 family farms threatened by new death tax
Posted on 12/11/2012 6:29:48 PM PST by george76
New legislation that jumps the death tax to 55 percent of estates exceeding $1 million threatens 526,421 family farms, of about 25 percent of all farms in America.
Farm values are largely tied up in non-liquid assets like land, buildings, and livestock. Many farm and ranch families would be forced to sell their assets to satisfy Washington Democrats' insatiable appetite for tax money. Up to 24 percent of America's farm and ranch families could be forced to hand over a large chunk of their heritage to the Internal Revenue Service when a family member dies. This would economically devastate rural communities
(Excerpt) Read more at washingtonexaminer.com ...
The IRS....stealing from the dead near you! Jesus said it right.... “tax-collectors and other SINNERS.”
I guess it is time for Obama to introduce the collective farm concept. ;-)
“This would economically devastate rural communities....”
Precisely the reason behind it all. It’s part of the plan to bankrupt the small farmer, and hand over their land, and business to the mega agri-corporations.
Caution: Cronies at work.
Do the taxes still apply if the assets are held in a trust?
Assets in a trust dont go though probate; not considered part of the estate.
I’ll need to see some documentation to verify this. My understanding is that the U.S. tax code exempts a farm from the estate tax as long as the heirs who receive the asset continue to operate it as a farm.
On NPR tonight they said family farms don't have to worry because they can pay the tax in installments.
Or the United Nations.
why not a 105% tax while we are at it?
we can start a leftist meme for them, they’re stupid- they’ll buy it
If that's true, it's nuts. Family farms don't make big profits. Most of them just make enough to get by, and usually someone in the family needs to hold down another job.
People don't do family farms because they can get rich that way. They do it because they like the lifestyle. It's hard, demanding work, but if you do the work it can be very satisfying.
But there's no real profits floating around that would enable anyone to pay huge death taxes to the gubbermint.
Warren Buffet will sell them enough insurance so they can keep the farm, that’s why he likes democrats, because they like the death tax.
this is the elitist dream to enjoy our natural treasures without the annoying middle class up and comers spoiling the view...
remember the fight over Sherwood Forest....
actually a lot of hunting nowadays is reserved for the rich or the famous....lots of land locked away from Joe the Plumber etc....
If it was turned over to the U.N. I would believe it would then in turn be handed over to their mega agri-corporation cronies. They are a government wannabe, not a business oriented entity.
IIRC, Buffett’s son farms in NE. Wonder how they plan to weasel out of the taxes and we can be sure they will. Buffett is all talk.
In NAZI Germany the NAZI’s took people from their homes and confinscated all they owned to fuel the socialist masses who loved their dear leader.
No one cared that the Jews aka capitalists, were sent to be re-educated in to the wonderful world of socialism and never returned. All they knew was they got some of their stuff when they left.
The same will happen here, sooner then anyone cares to admit, when the farmers lose their farms and no one grows food thousands will starve and die. No one cares, as long as they get their free stuff.
Many will be sent to re-education camps and never return. Look at our cities, look at what the fascists have done, and no one cares.
The article is misleading in that this is not new legislation. This goes back to the Bush administration, can’t place fault with Obama.
Liberals think this is progress, since they think that food should only come from unionized supermarkets.
Did you ever try to make installment payments on half a million dollars?
Otherwise you need to stick to places like Yosemite Valley where the huddled masses wait their turns in traffic jams on the roads and trails for the perfect picture of a trickling waterfall under a smoggy sky.
Why don’t these families incorporate their farms? Wouldn’t that allow them to keep the farm going from generation to generation without having to pay a death tax?
The elephant in the room here nobody seems to understand is once these farms are gone and/or the current generation of farmers/ranchers are gone with no replacements food prices will skyrocket. ConAgra, Del Monte, and the other huge operations will control the food supply of this nation with no option for us to fall back on.
Not to mention the destruction of our seed crops by genetic mutation and pollution of our products like milk by forcing producers to use potent antibiotics and other means to try and remain profitable.
The high taxes, cost of implements, over regulation, and land make it impossible for anyone who does not inherit land and is already wealthy to go into agricultural in no position above small operator. Most big parcels of land are now bought by the wealthy and sit idle or for use as dude ranches, bastions of solitude and such.
True ranchers and farmers loved the land and way of life and did so no expecting to ever get rich, only be able to hold their land and pass on their lifestyles.
Never heard of that. Don't believe it is true.
Not entirely true. Here is Texas yes, there is not much public land and 99% of hunting is on private high $$ ranches or family lands.
There is plenty of access to public land in the Rocky Mountain states. I hunt there almost every year. The problem is the government designating some as wilderness areas (which I am not opposed to) but that closes lots of land off and forces hunters to other public lands.
Ranchers in areas that are not “famously prime” or sleeper areas are sometimes willing to let you cross their land and even hunt on them, especially varmints and rodents. BLM lands also have plenty of access as by law the lessee cannot keep you off it.
Because someone has to own the corporation, and when they die the value of to portion of the corporation that they own is subject to the estate tax.
Agenda 21...google it. Adios farm owners....they have a plan for you.
Incorporation? That’s exactly what’s done in the People’s Republic of Maryland to avoid the taxes on the transfer of real estate.
Incorporate, contribute your home in exchange for stock, sell the home through a sale of the stock and avoid the real estate transfer fees!
Wrong, a Trust only protects you from having the state probate your estate and keeps it from public view. It saves you the 15% probate fee the court will access if you die intestate. Other than that, you are still subject to state and federal laws concerning taxation of estate. Depending on the trust, it can help you when you are still alive and in some situations make you law suit proof. A trust is a good thing if you have assetts, but not if you don’t
Even this is not enough of a benefit for businesses, so they arrange these mildly complicated deals so that they can transfer properties from one company to another without it being classified as a sale.
There are business properties in California that have changed hands several times that are still paying taxes near the original rates when Prop 13 was put into law.
Of course I'm supposed to be OK with anyone who can legally avoid paying taxes. I'm just wondering why farmers, who tend to be among the wisest (bookwise and streetwise) haven't figured this out yet.
This is why 40 years ago when land prices went up in Iowa, many families incorporated their farms. At that time, many heirs were forced to sell their farms to pay the inheritance taxes, so the smart ones turned their farms into corporations controlled by the families. This problem now is because Americans have a short memory, and have not thought about what would happen if their holdings exceed the government’s definition of “rich”.
this is basically zimbabwe through death taxes. obama freaking loves it.
Hopefully I will never have to. The NPR anchors heard that from some leftist they were interviewing and decided everything was ok.
Estates over $1 million will be taxed at 55%.
MANY congressmen/senators have estates over $1 million.
Find out how they legally avoid this penalty and do the same.
They always write escape routes into punative laws for themselves.
Land based assets are the toughest to pass down!
until 12/31/12 an estate value up to 10.2 mill can be gifted down to family members of two living parents. then it reverts to 2.1 mil. on 01/01/13. Who knows what congress will do in the future. In any case, it will trigger a reassessment for property taxes immediately if this exceeds 50% value of the land holdings. There are discounts for the actively farmed land itself but any other unsecured assets (think homes and even potential homesites) get bumped up! I have three sibling that work this farm with me. Dad has passed and mom may outlive us all. I’m almost 60 and still paying on dads estate taxes because only the 1 mill was available to him at the time. ROI’s are quite small in farming and spread 4 ways + mom makes for a challenge in bad years. We built this farm as a family living quite frugally but land values have increased faster than any amount of estate planning could keep up with. It is all a paper asset. we could certainly borrow against the asset but you have to service that debt and there is rarely enough to buy a toy that does not pay for itself. Land assets are not like any other capital purchases. There is no depreciation, in fact the opposite is likely true. A full appraisal must be preformed every time for any gifting to occur. Gifting to my kids is great but my wife and I need to retain some assets for our income. (Yes I know about A/B trusts) Any family that does not start estate planning from day one will eventually lose the farm to pay the taxes.
“Incorporate, contribute your home in exchange for stock...”
And what happens when the government declares that all corporations are now owned by the “People” due to the “current crisis.” It could happen. That incorporated home would be taken.
Now that Calif Dems have a Super Majority in the legislature—look for Prop 13 to be dismantled.
Jerry Brown and others in the legislature hate Prop 13 because it keeps them from raising property taxes over and over again.
I expect a new wave of people leaving Calif once and for all.
How will we be dependent upon the government for our food, if there are farms everywhere?
Socialism has consequences.. it is called Communism.
If Prop 13 went away, then my understanding (correct me if I'm wrong) is that property taxes would once again be set at the city or county level.
Cities and counties could then compete for having the lowest property taxes and minimal services, or maximum property taxes and maximal services.
There's no reason why individual cities couldn't decide to just vote in local versions of Prop 13.
Except one, perhaps. That reason would be that it might be considered unconstitutional for two homeowners to be paying significantly different tax rates on similar homes in the same neighborhood just because one of them bought the house on a different date than the other. It may be that Prop. 13 exists so that such inequities can be written into law.
But it might also be the case that taxes are not treated like fees, etc. And so it may be that anything goes and individual cities could vote in local versions of Prop. 13. Or cities could implement fairer systems that still kept property taxes relatively low and allowed seniors to stay in their homes even if the assessed values soar.
One thing local cities could do is to make sure that property is reassessed every time it changes ownership. There needs to be a crackdown on complicated deals whereby property is transferred from one company to another in such a way that it doesn't count as a sale and so doesn't get reassessed.
If this causes businesses to cry foul, then those same cities can do what other cities do in other states: they can give specific businesses tax breaks in order to lure them in (or keep them in) their cities in hopes that the going concerns will generate other sources of income for the city in the way of sales tax, income tax on employees, increased property taxes, etc.
Three or four years ago I told someone I thought we would end up like Zimbabwe and he told me that it couldn’t happen here! Somehow I was not comforted by that opinion.
The best world news this year is the further liberalization of the Cuban economy.
Communism went away in Russia, is going away in China, and looks to be receding even in places like Cuba.
The goal posts have been moved on both ends of the economic spectrum. Yes it's bad news that we are moving further and further away from the possibility of reattaining the moderately regulated free market economy we once had. But it is good news that we are moving further and further away from a communist dictatorship. People are finally wising up to the fact that the Communist model is a failed one.
Unfortunately conservatives have been labeling everything left of ideologically pure libertarianism as socialism. So now everyone calls what they have in Western Europe as socialist when in fact it is just an over-regulated and over-taxed controlled capitalist economy.
That's certainly a bad thing, but at least it's not textbook socialism which no one but a few professors at Harvard are stupid enough to think would actually work in the real world.
Our choices going forward are various forms of capitalism that are regulated, taxed, and rigged by whoever happens to have sufficient money to bribe the right public officials.
It is more regulated, more taxed, and more rigged than we would like, but it isn't socialism and barring some horrible disaster will never be communism.
That is something to be at least moderately happy about.
Communism is as communism does. If you don’t see that the Obama government is making huge strides on reducing private property and privately held business- then I think you are in denial.
People are not waking up- and the communist of the world have depleted the resources and wealth of other countries and have found a new host: The United States.
I’ve always wondered about this. Can’t the farm owner put it into a son or daughter’s name to protect them from the IRS?
How so? Wasn't it the intent of the Republicans to put a time frame on the death tax in order to get Bush's 2001 tax cuts approved?
It would be subject to gift tax. With proper planning you could, over a period of years, transfer small portions of ownership without paying tax, but if the property is substantial you might need to start when the children are born.
My dad died in 1997. At that time anything over $600K was taxed at 55%. His will was set up exactly as Submareener described in post 11 above. $600K in assets went into a trust and the rest went to my mother. No tax was due until my mother passed.
My mother passed this year, so we got (tax wise) lucky. Since her estate was valued less than $5 million there will be no estate tax.
My wife's dad is still living, but probably doesn't have much time left. He owns a tree farm of about 1000 acres that will definitely be valued in excess of $1 million (the expected limit as of 1/1/13). His will leaves the farm to my wife and her sister, but leaves all other assets to his wife. If he dies and the farm is valued at $1300/acre then my wife and her sister will have to come up with $165K to pay the IRS.
Since her dad isn't leaving any cash the only option is probably to sell part of the land. My wife and her sister could buy part of the land from the estate to raise the cash, and that's probably what will happen, but there is no way to escape the tax monster.
Well, when the government decides what’s our property is theirs property by fiat, we’ll have greater issues to worry about than taxes.
To paraphrae John Galt; If your intent is to do me harm, bring guns!
When someone says 'communism' then usually mean communism de jure.
If we want to be very accurate then there never was and never will be communism because communism is a pipe dream that is impossible for humans to create.
What Russia was (and pretty much still is), what China was and is, and what Cuba was and is is a government controlled monopoly. An argument can be made that every economy throughout the history of the world has been some form of capitalist economy, however most of them were monopolistic forms of capitalism.
Capitalism isn't a choice. It is how humans interact with one another. When things are going well then lots of people have lots of control over various parcels of land and various goods and services. When things aren't going so well then a very few people have control over vast amounts of land and resources. Normally those "very few people" form some sort of government to rationalize and justify their position.
The good news about our economy is anyone with a sufficient quantity of fortitude, intelligence, and moral malleability can make it to the top. This wasn't so when you had to be born into the right family or be friends with the right people.