Reality: The number of small, family-owned farms and businesses that owe any estate tax is small - and shrinking rapidly.
Despite oft-repeated claims that the estate tax has dire consequences for family farms and small businesses, there is in fact very little evidence that it has an outsize impact on these groups. Indeed, the American Farm Bureau Federation acknowledged to the New York Times that it could not cite a single example of a farm having to be sold to pay estate taxes.
Most recently, an analysis by the Congressional Budget Office confirms that exceedingly few family farms and small businesses face the estate tax. The CBO report found that if the current exemption level of $1.5 million had been in place in 2000, only 300 farm estates and only 223 family-owned businesses nationwide would have owed any estate tax. The number of taxable farm estates drops to 65 nationwide at a $3.5 million exemption level, the level that takes effect in 2009. The number of taxable family-owned business estates falls to just 94 under the $3.5 million exemption.
The CBO report also found that of the few farm and family business estates that would owe any estate tax, the vast majority would have sufficient liquid assets (such as bank accounts, stocks, bonds, and insurance) in the estate to pay the tax without having to touch the farm or business. For instance, of the 65 estates that would have owed tax under a $3.5 million exemption, just 13 would have faced liquidity constraints.
Analyses by the Urban Institute-Brookings Institution Tax Policy Center also find that that few small businesses and farms are subject to the estate tax.
See http://www.cbpp.org/3-16-05tax.htm.
-----Original Message----- From: lbo-talk-bounces at lbo-talk.org [mailto:lbo-talk-bounces at lbo-talk.org] On Behalf Of Doug Henwood Sent: Saturday, February 18, 2006 1:35 PM To: lbo-talk at lbo-talk.org Subject: Re: [lbo-talk] A New Name for "Estate Tax"?
Jordan Hayes wrote:
>I'm not sure "most" covers it; there are a large number of people
>whose small business is also the asset they die with. For many,
>that ends the business (or worse: puts their heirs into debt after
>paying the inheritance tax).
"Many"? I thought empirical study of the issue - not, of course, that that matters in politics - has found almost no instances of that sort of thing. I'm sure Max Sawicky could fill us in, if he's listening.
Doug ___________________________________ http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk