‘Schock Opposes Death Tax Plan That Harms Family Farmers’
Press release (my two cents follows):
Schock votes against death tax bill that is not indexed for inflation
Washington, DC – Today, Congressman Aaron Schock (R-IL) voted against H.R. 4154, the Democrat’s Permanent Death Tax Bill, when it passed the House by a vote of 225 to 200.
This legislation makes the death tax permanent with a tax rate of 45 percent on all assets inherited above $3.5 million, which is not adjusted for inflation. Because H.R. 4154 is not adjusted for inflation, it will gradually hit more and more families, farmers and businesses, much like the Alternative Minimum Tax.
“By not indexing the death tax for inflation, we are simply ensuring it’s going to have a negative impact on families, farmers and small businesses in the near future,” said Schock. “Within ten years, this legislation assures the average farm in 18th District of Illinois will be burdened with the death tax. To truly minimize the impact the death tax has on family farmers we should pass a bill that waives payment of this tax, provided the land stays within the family.”
Congressman Schock is a cosponsor of
- H.R. 3464, The Death Tax Repeal Permanency Act, which completely does away with Death Tax as of 2010
- H.R. 3905, the Estate Tax relief Act, which what sets the rate at 44 percent and $3.5 million cap in 2010, eventually getting to 35 percent and $5 million in 2019
H.R. 3524 the Family Farm Preservation and Conservation Estate Tax Act, which allows farmers and ranchers to waive payment of estate tax as long as land stays within family and remains in agricultural production or is placed into a conservation easement.
I’m gonna side with Schock on this one. Essentially, the estate tax (a less inflammatory name than “death tax”) is double taxation. It’s also confiscatory, in that it is designed to make sure people do not get too wealthy. Forgive me, but I never bought into the theory that someone’s legally gotten wealth caused someone else’s poverty. Personally, I hope that if I am ever a rich bastard, I would be able to pass the wealth to my family.
The estate tax has actually contributed to the accumulation of wealth into the hands of corporations (something worse than accumulation into the hands of families, IMHO). The children of farmers cannot pay the tax, so they well out to agribusiness. The same thing happens to newspapers. At one point most of the great newspapers were owned families. The former owners of the Journal Star created an employee stock ownership program to, in part, keep the newspaper owned locally, but it backfired and Copley ended up owning the newspaper. Eventual, GateHouse bought the paper.
Billy Dennis is a former reporter and editor at small daily and weekly newspapers in Illinois and Missouri. He comments on media, news and politics. He also owns and operates 
As much as I hate to, I side with Schock on this, too. It’s idiotic not to index stuff like this to inflation. It always turns out badly, as with the Alternative Minimum Tax.
It’s indicative of the inability to think beyond the next election that plagues politicians. Speaking of which, how smart was it to decrease the estate tax, then eliminate it, then bring it back full force? Regardless of how one views the estate tax, the law was just dumb.
I agree with Schock and Billy, estate taxes are horrible in general. However they are incredibly destructive to estates composed of a lot of non liquid assets like property.
And $3.5 million may sound like a lot, but when you figure in equipment and other assets it really isn’t, especially when it doesn’t adjust for inflation.
The moral arguments against the death tax are powerful. But it makes no economic sense for our country either.
MORE money is spent trying to avoid the inheritance tax than the sum total the government receives in revenue from it. All the money spent on accountants, estate tax planners, and tax and trust lawyers totals more than the government ends up getting.
This is a net economic loss for the country. All that money ought to be spent on productive things that create economic growth and jobs instead of elaborate financial schemes.
Most truly rich never pay it anyway. They use those sophisticated tax avoidance trusts and things like that. So this tax falls disproportionately on small business and family farms that must sell at least part of the farm or business to pay the death tax.
You earn it, you pay tax on it, it should be yours and your families, free from taxation again just because you die, but again, the United States of America loses money trying to collect death taxes.
Yes, the estate tax is a social tax – it is a progressive tax aimed at less than 1% of the population – the wealthiest 1%. It is a tax supported by the two richest men in the U.S. They have benefited greatly to say the least from our society and this is a re-distribution of those gains. (Both decided to give most of their wealth to charity)
Each person has a $3.5MM exemption and you can pass everything free of tax to your spouse – so most families can shelter at least $7MM from estate taxation.
Very few farmers are affected by the estate tax. In 2004, when the personal exemption was $1.5MM, the number of farms on which estate tax was owed was just 300 and no more than 27 had enough liquid assets to pay the tax. Further, there are also numerous provisions in the way the tax is computed to both reduce the taxable value of farms and closely held businesses as well as to delay payment of the tax over many years.
In other words, there are very few small, family owned farms – at least where the farm is the primary asset. This tax hardly affects small farmers – at least not most worth less than $7MM.
Indexing it would have been nice – giving so-called small farmers yet another subsidy is idiotic.
RWR – “you earn it – you pay tax on it it should be yours and your families” Fine – then the tax you pay on it when you earn it needs to be higher to offset the loss from repealing the estate tax.
So Jon’s basic point is that he likes taxes ?
Jon, you act as though the money belongs to the government in the first place. It doesn’t. The death tax is double taxation. How about we spend less so taxes don’t have to be so high. Low taxes also creates economic growth and high taxes stifles it. Workers lose when investment funds that are needed to create jobs dry up when taxes are high.
You don’t seem to get the main point. Our country as a whole pays more in avoiding the death tax than the government collects from it. That is just stupid. I’d rather the money and time of talented professionals be put to use generating new business and jobs.
Jon, I’m not a big fan of farm subsidies, but I’d sooner Congress get rid of those direct payments.
I recall that spectacle of a few years back in which Bill Gates and Warren Buffett testified before Congress in favor of the estate tax. Radio talk show host Bob Brinker made the point at the time that others who opposed the tax were not invited to testify. Gates and Buffett had the private jets and fame that allowed their voices to be heard. I agree. It was obscene.
David Copley’s decision to sell all his papers, including the Journal Star, was almost certainly influenced by the estate taxes he faced after the death of his mother in August 2004. Most of us then at the Journal Star hoped she would live forever.
RWR, you act as though citizens of the U.S. have no obligation to pay taxes. They do. The question is how to tax and why. Nobody likes paying taxes, 11bravo, but they are necessary. “Double taxation” and the notion that estate taxes hurt small farmers are both red herrings. I receive wages as income and am taxed on it. I then use it to buy basic needs and am again taxed on it via sales taxes. Is that not also double taxation?
Spending less sounds great, but what are you going to cut? Social Security and other entitlements? Defense spending?
The estate tax may not be the most efficient tax, but that is not exactly its purpose. Again, it is a social tax to force those in the top 1% (or less) to give more back to society. It also encourages charitable gifting (to avoid the tax). Check out the following if you are so inclined – there are many interesting suggestions for changing our tax policies:
http://www.taxpolicycenter.org/briefing-book/improve/incremental-reform/estate.cfm
Of course, all those people working for the rich to avoid taxes have jobs doing so
You could even argue that the continual complexity to our tax code has not only created but expanded an entire service industry. How bout that for job creation!
Incidentally, I heard that Alan Greenspan believes that there is a more than 50% chance of enacting a VAT like consumption tax (yes, as an additional tax) in the next few years – probably 2013, after the next presidential election.
The supply side economics of Reagan and Bush hasn’t worked. Bush 43’s policies of reducing taxes on the wealthiest has led to some of the greatest income disparities since the robber baron days. What society gives, society takes away – when the results don’t materialize as claimed. The economic crises was one created by unchecked greed, as well as an inability by most consumers to balance a checkbook.
ExJSer – if Helen Copley ran the business until her death and then turned it over to David and he kept it but ran it poorly, what’s the difference? If David sold some of the papers because he no longer wanted to be in the business, why couldn’t the new owners run it the way Helen did? The point is Helen Copley died – change was thus inevitable – don’t blame estate taxes.
“Is that not also double taxation?” Yes it is, but that wasn’t what this thread is about. Speaking of red herring… Which by the way you used both incorrectly (with regards to double taxation) and failed to prove (with regards to the farmer statistics).
“FORCE those in the top 1% (or less) TO GIVE more back to society.” – Gosh, that wounds like a swell concept, aside from being oxymoronic in nature. Lets also just forget that these greedy 1% create the businesses that employ people and like you pointed out earlier give the most to charitable causes. But, damn them they aren’t doing as much as Jon wants them to!
“RWR, you act as though citizens of the U.S. have no obligation to pay taxes. They do.” No, they don’t. The citizens of the US have chosen to pay taxes. You have a very warped sence of taxation.
11bravo:
1. “double taxation” – I was referring to RWR’s claim that estate taxes were “double taxation”
2. “red herring” – defined as a “deliberate attempt to divert attention”. RWR’s argument about that estate taxation was “double taxation” – as if that is uniquely wrong and/or uncommon, because “double taxation” sounds bad.
3. Sorry, but if you don’t understand that estate taxation affects less than 27 farmers in the U.S. is not meaningful (and that was a few years ago when the exemption was $1.5MM – not $3.5MM), I just don’t know what to tell you. However, Schock’s claim that it will, in 10 years, affect every average farm in this District is flat out wrong.
4. Those “greedy 1%” create the businesses that employ people – and are extremely well compensated for it. They should be taxed MORE – that is the whole point of progressive taxation – Oh, and since you seem to like the economic side of things, you do understand that over 80% of economists support progressive taxation?
5. The citizens of the U.S. have chosen to elect officials who have enacted laws REQUIRING the payment of taxes. Warped sense of taxation? You yourself can prove your theory that citizens are not required to pay taxes – don’t pay your property bill or income taxes – see what happens.
The supply side economics of Reagan and Bush hasn’t worked.
Yes they did. Each time tax rates were cut (Harding in 1921, Kennedy/Johnson in 1964, Reagan in 1981 and 1983, GOP Congress in 1997 and Bush 43 in 2001 and 2003), the economy boomed, U. S. Treasury revenue increased and more investment and greater job creation occurred.
Bush 43’s policies of reducing taxes on the wealthiest has led to some of the greatest income disparities since the robber baron days. What society gives, society takes away – when the results don’t materialize as claimed.
Huh?! Income is income, Jon. You’re thinking like a socialist. “Tax the rich until they make no more than Joe Sixpack!”
The economic crises was one created by unchecked greed, as well as an inability by most consumers to balance a checkbook.
Surely you mean government, not consumers.
I was tempted to include government – but I’m not opposed to government debt. Especially when you have to spend your way out of a mess created by the Bush economic policies. The keys are that the debt doesn’t become too big (equal to annual GDP) and is preferably owned by more U.S. customers (individuals, companies, other governmental agencies, etc.) rather than foreign investors so that we are essentially paying back ourselves.
David, like it or not, this country has become more and more socialistic. Just accept it, it’s the natural order of things!
Granted, the Dems will probably go “too far” in one direction (just like Bush did in the opposite direction) and the GOP will someday get control and push things back the other way. But despite all that back and forth, 30 years from now, we’ll be more “socialistic” than we are today, regardless of who is in power.
Socialism is pure stupidity, and I won’t accept stupidity. And it’s not too late to stop it. Bush didn’t go “too far in the other direction.” Had he kept conservative principals, he wouldn’t have been such a big spender, nor would he have agreed to the bailout.
Jon, since you can’t provide stats or other meaningful info beyond your own opinion let me ask you this. How much EXTRA did you send to the federal government for this calendar year and how much extra do you plan on paying to the IRS this coming April?
I’ll let you prove the validity of your point of view with your own checkbook…
11bravo – I’ve provided the stats twice now – here is the link (all you had to do was ask):
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/23/AR2005072300741.html
I’m not the one arguing that I want to pay extra – I’m saying that the law requires us to pay – and that the laws are designed to be progressive – that the “rich” pay more than the “poor”. Thus an estate tax.
The estate tax is not “double taxation” in many cases. For “trust fund” babies, they inherit money that was never taxed. In many cases, money can be passed down from generation to generation without taxation. This is part of the reason for the growth in income and wealth inequality.
Moreover, the provisions of the tax affect affect only a tiny portion of estates each year. Nonetheless, the estate tax works towards a laudable social goal and public policy, restricting the ability of the most wealthy families to further increase their wealth generation after generation. The growth of a permanent upper class, who inherit great wealth without work, perils the social fabric of our democracy