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The
lowdown on the death tax
The death tax has outlived its usefulness. In 1916, the death
tax was initiated to fund World War I. It was maintained in the
tax code through the 1920s and 1930s to help prevent the
concentration of wealth. Since that time, antitrust laws have
eliminated those concerns. The death tax, however, remains a part
of the tax code.
The death tax generates very little revenue for the federal
government, yet is a significant burden on America's farmers and
ranchers. Less than 1 percent of the government's revenue is
generated from estate taxes. Collection and compliance costs,
however, remain extremely high. It costs approximately 65 cents
for every dollar of revenue for the collection and compliance
costs of the death tax.
Individuals, family partnerships or family-controlled
corporations own 99 percent of U.S. farms. Estate tax laws often
force the sale of family farms rather than allow future
generations to continue farming.
Partly because of death taxes, more than 70 percent of family
businesses do not survive the second generation. Eighty-seven
percent fail to make it to the third generation.
Death tax rates can be as high as 55 percent, forcing many
family farmers and ranchers to sell land, buildings or equipment
just to satisfy their death tax obligations to the federal
government.
While calling for the total repeal of the death tax, Farm
Bureau supports raising the estate tax exemption to $5 million.
Increasing the exemption to just $2 million would enable 95
percent of America's farms and ranches to be passed down to the
next generation without huge death tax bills attached. |
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