The Death Tax
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The death tax is the Estate Tax, which is levied by the
Federal government on estates left by individuals upon their demise.
Currently, the estate is exempted up to a certain amount and the heirs or
devisees do not pay income tax upon their inheritance. Additionally,
their basis for capital gain purposes is the value at the time they
inherit, not the deceased’s basis, which is typically substantially
One of our first visitors is a rancher in Colorado. She recently
sent a letter to her Senator, Ben Nighthorse Campbell, calling for the
prompt elimination of the death tax, if possible, but at least its
substantial amelioration. Her ground is the tax’s likely
destruction of family farms and ranches. If you live in the city,
however, do not think this does not apply to you. Where you read
“ranch” or “farm,” think “apartment building,” “home,”
“investment portfolio,” or anything else of value you might own at
your death. She makes the case so well we reproduce the letter in
full, but we will have a few things to add after it.
Dear Senator Campbell:
Last year I contacted you begging for
the total elimination of the Death Tax. You responded defining your
preference for a gradual elimination of that Tax over an extended period
of time, stating that so doing, in your opinion, would lighten the burden
of finding the money to replace those dollars in the over-all scheme of
high finance. At that time such a Bill was already headed for the poison
pen at veto-Heaven and further discussion appeared fruitless.
Now we have a new horse in the starting
gate with renewed hope that Congress will readdress this issue in the
immediate future and such a Bill might survive the pen point if/when
PLEASE renew your vigor for
Death/Estate Tax relief; and, PLEASE reconsider your former position for
the following reasons:
The single most prevalent reason for
the demise of the family farm in America is the Estate Tax. Until and
unless the Death Tax is totally eliminated this FACT shall continue to be
average age of all farmers and ranchers in America is NOW over 50 years of
will reflect 50% of the farmers and ranchers over the age of 50, many now
in their 60s and 70s or older.
stands to reason that if the Death Tax remains on the books and/or if it
takes 10 years to eliminate it, by that time it will be too little too
late for those of us over that 60-year-old line in the sand. We must do
our Estate planning or liquidate our assets NOW.
It is not in
the best interests of the American public to allow the Death Tax to
continue and thus promote the demise of family farms and ranches. Not only
does this land provide the food they eat, it also provides the "open
space" they covet.
PLEASE consider the following
suggestions as a compromise or alternative position between your
previously stated desire to eliminate this Tax on a gradual basis over the
next many years and my adamant desire to eliminate it entirely,
In lieu of
totally/immediately eliminating the Death Tax, perhaps the solution to
inheriting family farms, ranches and family businesses is to provide a
more realistic exemption ... say, $10-$20 million or more. I do not know
the upper level of value that might still be referenced as a family
operation, but it is certainly much higher than that $2.6 million +/-
continue to be concerned about the influx of cash into the high finance of
the Nation, would it not be more appropriate to reduce those concerns by
plugging the holes in the dam created by the IRS itself, who can not pass
an audit while still allowed by law to audit each of us? Or, perhaps the
military can find those millions of misplaced ... "lost" ...
dollars for which they can not account? You get my drift, right?
Why must the
load be carried on the backs of the families of the deceased when
"the government" remains irresponsible about the spending of and
the accounting for the dollars we have already given to it?
Even the worst criminal who has
committed the most heinous crime is protected from paying for the same
crime more than once.
It is my not-so-humble opinion that the
Death Tax amounts to double jeopardy for the citizens of our great United
States of America. Each dollar spent to accumulate an Estate is taxed when
earned. To shelter that Estate from further taxation by the government is
not to reduce any person s obligation to contribute to the well-being of
our Nation and/or our Society.
PLEASE reconsider your position and
thoughtfully consider my suggestions and comments.
Thanks again for all the many things
that you have done for all of us out on the South Forties of the glorious
State of Colorado. I send you and your family my very best wishes for a
Happy and Successful New Year.
Rose Mary Allmendinger
Excellent, so far. There is no doubt that the death
tax is odious, but there are a few more things to be said and done.
Not the least of these has to do with Senator Campbell’s concern about
how the government will do without all that revenue. This concern
is specious. When was the last time the legislature worried about
where you were going to get the money to pay one of their tax increases?
The hidden culprit in all this is the income tax, specifically, the
capital gain tax. The income tax, the tax on productivity, warps
every transaction and decision in our society. This is the case with
efforts to eliminate the death tax.
People who inherit from an estate take the property at a stepped up basis.
For example, let us say that Joe sells a piece of land. He paid
$150,000 for it years ago, and sells it for $300,000. His basis for
the purpose of calculating his capital gain is $150,000. This,
subtracted from the sale price, gives him a taxable capital gain of
$150,000. Now suppose instead that Joe dies and leaves the property
to his son, Frank. The property is appraised as being worth $300,000
at death. Frank sells the property immediately upon transfer for the
appraised value of $300,000. Since Frank got a stepped up basis, his
basis in the property is $300,000, not Joe’s $150,000, so Frank would
owe no tax.
There was a little mentioned sting in the proposal to eliminate the death
tax, which was vetoed last year. It would have eliminated the
stepped up basis. Had it been signed, Frank would inherit the
property and take it with Joe’s basis, and in our example above Frank
would have to pay tax on $150,000. The effect of this would be
devastating to our long-standing public policy favoring free alienability
of property. The astounding tax liabilities that would arise on the
sale of assets held for extended periods, for example a farm or apartment
building held by the same family for several generations, would lock up
capital assets as effectively as entailment did estates in land in Merrie
Olde England. We hasten to add that this was not the reason our
Maximum Leader vetoed the bill. In any event, the locking of assets
into families more or less permanently would affect not only real estate,
but also any other asset that tends to increase in value.
The income tax is probably the dumbest way to raise government revenue.
That component of it called the capital gain tax is even worse because it
is insane. It is akin to eating your seed corn.
By all means, let us petition Congress to eliminate the death tax.
But also, let us petition to eliminate the capital gain tax, or, at least,
to retain the stepped up basis. You can email, or snail mail, or
even telephone your Senators and Representatives easily. They all
have websites. The Senators are
here. The Representatives are
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