Death tax death
I see where the U.S. House of Representatives voted 272-162 to eliminate the Estate Tax in 2010 and beyond. The measure prevents the tax, commonly called the Death Tax and enacted in 1916 to fund the First World War, from reappearing after a one-year exemption in 2010. Final approval rests with the Senate and then affirmation by President Bush, which will happen the second it reaches his desk.
The Death Tax was maintained in the tax code through the 20s and 30s, with the excuse used to help prevent the concentration of wealth. Since that time, anti-trust laws have eliminated those concerns, but to date the tax remains intact. Today, after utilization of a $1 million exemption, the rate of tax is 37 percent and once assets have reached the size of $3 million, the rate of tax is 55 percent.
We are number one
According to the Internal Revenue Service (IRS), 54 percent of all estate taxes paid in 1995 came from net taxable estates of $5 million or less, and a whopping 89 percent of all taxable estates filed were $2.5 million or less in size. The United States has the highest rate of estate tax in the world, a dubious distinction at best.
Let that sink in a moment, then be mindful that so-called "progressives" are already crying about the "rich getting richer" and other trite class warfare phrases. But instead of pushing an agenda, let's look at this rationally.
Where I'm from, the majority of land use is in agriculture. I have worked in agriculture and I understand that those of you not familiar with modern farming do not have a solid grasp of its associated land, equipment, critical infrastructure (buildings), and facility operational costs or values. Since light and heavy industry moved away decades ago thanks to excessive taxation and over-zealous unions, another key industry is tourism.
Backbone of American enterprise
For example, the Finger Lakes Region is chock full of small lodges, resorts, bed and breakfast inns, and tourist attractions. Most of these and nearly all of the farms fall under the clutches of the Death Tax. We're not talking rich folks here, just people like you and me with family-owned businesses and traditions. In other words, the backbone of American enterprise that is comprised of 80 percent of its total in small businesses.
Secondly, the death tax is clearly double taxation. Those assets subject to the penalties of the Death Tax have been taxed with income tax and capital gains tax, as well as other state and local taxes. According to the Family Business Death Tax Coalition, more than 70 percent of family businesses subject to the Death Tax do not survive the second generation; 87 percent do not make it to the third generation. This seems a heavy price to pay when according to the IRS only a little over 1 percent of the government's revenue was generated from the Death Tax in 1998.
Think about these things the next time you're on holiday, in the supermarket, or at the produce stand. Rather than expending energy on a divisive class war, you should probably email your senator and urge for permanent repeal of this double-taxation kiss of death for family-owned businesses. I already did.