Once again, the U.S. is debating the estate tax. And once again, partisan pundits and politicians are evoking farmers and family-owned businesses as the true estate-tax victims.
- Everett Collection
- Paris Hilton and Nicole Richie in the second season of the Simple Life.
The debate is being prompted by the Obama-GOP tax deal, which calls for taxing estates over $5 million at 35%. The Democrats want a 55% rate on estates worth $3.5 million or more.
The Democrats argue that higher tax is needed to lower the deficit and inequality (the latter being the real motivation). The Republicans say the lower rate would hurt farms and family businesses.
Sen. Chuck Grassley, a Republican from Iowa, says that “this legislative agreement makes sure the government can’t take more than half the estates of farmers and small business owners who have scrimped, sacrificed and saved their entire lives to build up a family business.”
A recent IRS report, however, casts doubt on the claim that farmers and small-businesses are the main victims. According to a white paper by Brian Raub, an economist with the IRS Special Studies Special Projects section, farms and family-owned business account for a small fraction of estates worth $3.5 million or more.
Does the Estate Tax Hurt Farmers and Family Businesses? – The Wealth Report – WSJ