unSpun_ Finding Facts in a World of Disinformation - Brooks Jackson [49]
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“Death Tax” Bunk
RADIO AD:
When you die, the IRS can bury your family in crippling tax bills. It can cost them everything. What’s worse, the death tax is a double tax on all you’ve worked to build.
(American Family Business Institute, June 2005)
PRESIDENT GEORGE W. BUSH:
We also put the death tax on the road to extinction because farmers and small business owners should not be taxed twice after a lifetime of work.
(Radio address, January 21, 2006)
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Farmers and small businesses were under attack in the year 2005, if a radio ad from that year is to be believed: “When you die, the IRS can bury your family in crippling tax bills. It can cost them everything.” That claim was in a radio ad that ran in eight states in 2005, part of what the sponsor said was a $15 million campaign to repeal the tax permanently. The ad was paid for by the American Family Business Institute, a group made up of about 500 businesses and including three billionaires, according to organizers. Others known to have funded anti-estate-tax lobbying include the billionaire Mars candy and Gallo wine clans.
The same claim had been picked up by the Republican party and had become part of its antitax orthodoxy. President Bush repeated it throughout his tenure of office, saying six weeks after his inauguration that Congress should “eliminate the death tax so family farmers aren’t forced to sell their farms before they want to.” But the notion that farmers are forced to sell out and that families can lose “everything” is simply false.
The fact is, as the nonpartisan Congressional Budget Office said in a report issued in July 2005: “The vast majority of estates, including those of farmers and small-business owners, had enough liquid assets to pay the estate taxes they owed.” In other words, the “vast majority” had no need to sell any assets at all—let alone “everything”—to pay estate taxes. The CBO said that returns filed in 2000 showed only 138 farmers and 164 family business owners left estates without enough liquid assets to pay their estate taxes. And the CBO estimated that those numbers would fall to fifteen farmers and sixty-two family business owners by the year 2006, when only estates valued at $2 million or more would be subject to any tax.
The CBO was putting matters cautiously. The New York Times reported in 2001 that one of the leading advocates for estate tax repeal, the American Farm Bureau, “said it could not cite a single example of a farm lost because of estate taxes.” The Farm Bureau, a huge lobbying organization that calls itself “the voice of agriculture,” then went scrambling to find such an example. Within days of the Times report, the organization’s president issued an internal bulletin saying: “It is crucial for us to be able to provide Congress with examples of farmers and ranchers who have lost farms or have had to sell off portions of their land that makes [sic] the remaining parcel ‘inefficient,’ due to death taxes.” The memo was quoted by Congressional Quarterly Daily Monitor, which also said no examples had been found. When we called the Farm Bureau in early 2006, they weren’t very happy to hear from us, and they still could not point to a farm lost to pay estate taxes.
That anyone could “lose everything” to the estate tax is a logical impossibility, anyway. As of 2006, there is no tax at all on the first $2 million of any estate (effectively, $4 million for a couple that takes certain estate planning steps). The maximum tax rate is 46 percent (and set to go down to 45 percent in 2007) on anything above those amounts. Far from losing everything, heirs keep most.
We’re not arguing for or against estate taxes. We are saying that hard data from tax returns, analyzed by a nonpartisan body noted for its consistent use of reliable methods, show that one of the principal claims made against the estate tax is false. There’s another argument, with which