The Estate Tax serves a purpose both to generate revenue for the Federal Government (and all of us who benefit from the government;s activities - that is, all of us) and also to prevent the perpetuation of wealth among the already wealthy by avoiding taxation. Bear in mind that the estate tax applies only to estates valued at $3.5 million for an individual and $7 million for a couple. Even beyond these numbers, there are many allowances that can be applied to shield large portions of an estate from taxation and virtually no one pays the high end figure allowed by the IRS. The real average paid by those owing estate taxes at all is 17 percent.Of the 440 taxable family farm and business estates in 2004, two out of five paid an average rate of only 1.6 percent.
Neil Harl, an Iowa State University economist whose tax advice has made him a household name among Midwest farmers, said he had searched far and wide but had never found a farm lost because of estate taxes. "It's a myth," he said.
Even one of the leading advocates for repeal of estate taxes, the American Farm Bureau Federation, said it could not cite a single example of a farm lost because of estate taxes.
In Iowa, the average farm has a net worth of $1.2 million. Loyd A. Brown, president of Hertz Farm Management in Nevada, Iowa, which runs more than 400 farms in 10 states, said none of his firm's clients nor anyone he knew was facing problems because of the estate tax.
In fact, the overwhelming majority of beneficiaries are the heirs of people who made their fortunes through their businesses and investments in securities and real estate.
What is more, a farm couple can pass $4.1 million untaxed, so long as the heirs continue farming for 10 years.
For 2009, only 5500 estates in the entire country actually ended up paying estate taxes at all. Nearly half of that was paid by the richest 1 in 1000 people. In 2009, estates with farm and business assets making up at least half of gross estate and totaling $5 million or less represented just 1.9 percent of all estate tax returns.
I think there has been a lot of misrepresentation concerning this tax and it has succeeded in convincing the average household that it not only impacts them (which is probably doesn't if they are not among the richest people in the nation) but that it is also hurting good hardworking people (like farmers - also not true) and is a plague on society. I disagree. I think this tax issue will impact very few of us here, the farm issue is a non-issue and that people with this much money in assets could stand to pay more to the common good.