A Costly Free Lunch - WSJ's Al Hunt

[question everything]

Mr. Hunt invites comments to [email protected].

A Costly Free Lunch
October 7, 2004; Page A19

President Bush, in a town-hall meeting with carefully screened voters this week, told an Iowa farmer that he'll be able to keep his family farm if the estate tax is repealed. A little to the north, South Dakota Republican candidate John Thune, running for the Senate against Minority Leader Tom Daschle, has made total repeal of the estate tax one of the centerpieces of his quest. This may be good politics, but it's a fraud. Several years ago, an Iowa State University economist couldn't find a single true Iowa family farmer who had to sell the farm to pay estate taxes. In fact, few Iowa farmers pay the tax at all. Perhaps Mr. Bush found a rarity.

In South Dakota, Frank Slagle, a University of South Dakota Law School professor, says the estate tax is "irrelevant" to 99% of the state's population. Asked about this by the Associated Press, candidate Thune had an answer: "If not that many people have paid it, they won't miss it then."

(snip)

A recent Congressional Budget Office report unequivocally asserts that repeal of the estate tax will cause a pronounced drop-off in charitable contributions. In 2000, individuals made $212 billion in charitable contributions. Much flowed out of generosity and genuine commitment. Some, however, was facilitated by tax planning, particularly the estate tax, where, after providing a nice nest egg for any relatives, wealthier people find it more attractive to give to the alma mater or local hospital -- perhaps get something named after them -- than to Uncle Sam.

(snip)


When this sham was enacted several years ago, where were the colleges and universities and hospitals that will be hit so hard? Nowhere. Why?.. There is a more sinister explanation. Many of these institutions have wealthy trustees who would personally benefit from a measure that would hurt the institution they're supposed to be serving.

(snip)

There are plenty of good reasons to oppose outright repeal -- and favor sensible relaxation -- of the estate tax. It would reward a truly disingenuous and duplicitous political campaign; an unprecedented bonanza for the richest Americans is masked in quasi-populist language. President Bush and others frequently contend that repeal of this tax would be a boon to small businessmen and farmers, encourage entrepreneurs, make the tax code fairer, avoid double taxation and benefit middle-class families. The truth: Most genuine small businesses and family farms already escape estate taxes with exemptions and other exceptions. Repeal would, as Bill Gates Sr. and Warren Buffett have eloquently argued, exacerbate income inequity in America. Fewer than 2% of estates pay this levy and most of that is paid by the wealthiest 5% of estates. Mr. Gates talks about the need to "protect our democracy from a further buildup of hereditary wealth."

(snip)

URL for this article:
http://online.wsj.com/article/0,,SB109711330716538881,00.html

[madrchsod]

1. this is another reason that

family farms became "corporate farms". family run farms have become larger and more complex so they now run farms as such. whole different taxing rules. the only reason that a family farm was "death taxed" is when the owner did not leave a will. i know of several famlies that this happened to..

[papau]

2. Well written Truth-estate tax captures untaxed capital gain-isn't a death

Well written Truth-estate tax captures untaxed capital gain-isn't a "death" tax.

The rich WANTED an ESTATE TAX instead of keeping records of what they purchased that are need so as to tax unrealized capital gains at time of transfer of ownership.

This is just part of the GOP plan to not tax investment income so that the rich - who get 90% of their income from investment income - get a 90% tax cut.

[dogtag]

3. Yep, it's got a bit in common with the "Healthy Forests" initiative and

other Orwellian bogus repuke bits.

I remember hearing one of the talking heads at the repuke convention mention meeting John McCain's very elderly mother. The old girl had commented that she planned to live long enough for the 'death' tax to be repealed so her grandchildren could get her money. Either she's good one big fat estate or she's just another confused senior citizen fooled by the GOP spin machine.

[tibbir]

4. My 84 year old mother has less than $200,000 in total assets (much less)

but one of the reasons she supports the repukes so strongly is that they're against the "death" tax. By substitutine "death" in place of "estate" , the repukes have pulled off a huge propoganda triumph.