April 17, 2015
It’s repeal the estate tax season, which means we are hearing all sorts of nonsense about how the tax forces people to sell their family farm or business. It should be self-evident that this is nonsense since no one owes a penny of tax on an estate worth less than $5.4 million. And, just to be clear, this is net of debt. If the “family farm” is worth $10 million, but comes with $5 million in debt, then the net worth is $5 million, meaning the kids get it after paying zero in tax.
But if you still think that families are losing their farms because of the tax, then it’s worth going back to an old NYT story by David Cay Johnston. Johnston called the American Farm Bureau, a major lobbyist against the tax, and asked to be put in contact with someone who had lost their farm due to the estate tax. The Farm Bureau could not produce a single family anywhere in the country who had lost their farm as a result of the tax.
In short, families do not lose farms or businesses due to the estate tax. They lose them because the next generation doesn’t feel like operating them. This is just one more story that politicians tell in order to justify reducing taxes on the very wealthy. The media should point this fact out.
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