Get FREE Stuff! Run Credit Report Rental Forms Vacancy Center Shop & Buy!

Information Center-FREE ARTICLES! HomeDo-It-Yourselfe-Forms CenterEvicting Your TenantLandlord Discussion BoardInformation CenterJOIN Landlord.comLandlord LawLibraryMulti-FamilyProfessional AdviceRental & Property MgmtRent CollectionRepair & MaintenanceSecurity DepositSoftware CenterTenant ScreeningVacancy CenterVacation HomesWhat's New


Kill The Death Tax

© Copyright 2001-2014

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 lower.

            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 passed.

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 true.

The current average age of all farmers and ranchers in America is NOW over 50 years of age.

That average will reflect 50% of the farmers and ranchers over the age of 50, many now in their 60s and 70s or older.

Therefore it 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, immediately:

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 +/- currently allowed.

If you 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.

Respectfully requested by 

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 here.  

Related articles:

Boot & the 1031 Exchange

Contractor or Not?

Home Office Deduction

Tax Strategies For Landlords

Becoming the Landlord

Back To Alphabetical  Back To Category