Well it’s 2013. We survived a lot this past year. The Mayan’s really poor sense of humor, our President and Secretary of State blaming a youtube video for the death of 4 Americans, Hamas attacking Israel and nearly starting an all out war, the “ceasefire” between Palestine and Israel, Hurricanes, the election season, election night (I nearly didn’t survive that and several bottles of alcohol were murdered, but we made it), and I managed to not punch anyone in the face this year.
That was a close one to be honest and if I had physical access to some of the liberals on tumblr, that might not have happened.
However big things are happening this year and we need to discuss them. The obvious issue would be the fiscal cliff, but that’s a horse that’s been well and truly beat to death by better people than me and I’d like to avoid it.
Something that people have not been talking about as much is the fact that estate taxes (commonly referred to as “Death taxes”) are going up to 55% this year and $1 million is now the threshold. This would be a really bad year to die and leave an inheritance to your kids.
Two decades ago, Kester paid the IRS $2 million when he inherited a 22,000-acre cattle ranch from his grandfather. Come January, the tax burden on his children will be more than $13 million.
For supporters of a high estate tax, which is imposed on somebody’s estate after death, Kester is the kind of person they rarely mention. He doesn’t own a mansion. He’s not the CEO of a multi-national. But because of his line of work, he owns a lot of property that would be subject to a lot of tax.
“We’re not millionaires in the terms of making a million dollars a year,” said Kester who lives in a modest home and whose family — not outsiders or a corporation — runs his ranch. “I have a half-a-million dollars in soil.”
Kester can’t spend it, without selling land. But by selling the land, each year the ranch would become less viable.
- Fox News
In fact this will effect over half a million family farms in the United States.
See, an estate tax does not tax income or liquid assets. It taxes your assets and your estate. “A tax levied on the net value of the estate of a deceased person before distribution to the heirs.” And the estate and assets of a farm or ranch, while not liquid in many cases, add up to being worth a pretty penny very quickly. Land is not cheap and neither is the farming equipment or cattle or other livestock that one would find on a farm or ranch.
In 1997, a study looked at 22 herds of cows that averaged 99 heads of cattle and with the cost of cows being extremely high ($900 a head or more) the asset of a heard of cows could be worth over $100,000.
Then the land could be worth several million on its own.
Crops grown on a farm could be considered an asset and wheat, corn, and other crops are worth a lot!
Farm equipment is another expensive asset.
Family farms and family cattle ranches, which may not have much in the way of liquid assets (many do not) are quite often worth more than the million dollar asset limit asset limit.
So what happens when the person who owns one of this asset rich family farm or ranch dies and passes on the property to their children?
Well in the case of the Kester family, his children will have to pay a ‘death tax’ of $13 million dollars on his estate. The ranch does not have that sort of liquid worth, so the children will have to sell off part of their father’s land, their birthright, to pay the IRS.
Pay them for what exactly?
For the fact that their father died?
The land has neither gained nor lost value with the death of the father. The land is probably not even leaving the family line, no one is making a profit from the transfer of the land from the father to child.
But the IRS, like vultures picking the flesh off the dead, want their piece of the pie.
The estate tax is a relic that not even Russia or China still employ. Are we really so greedy and grasping that we use the death of someone as a reason to snatch as much of his or her property and assets as we can?
I guess the answer to that is yes, but it shouldn’t be.
Estate taxes are an unethical money grab by the government and they need to go. Even if the limit was moved up to protect family farms and ranches, the estate tax would still need to go. It’s a sign of greed and grasping at anything that someone else has earned.
I want to pass on my wealth to my children. That’s why I work so hard to better myself, not just to give them a better life while I’m with them, but to leave them something when I pass on. I don’t do it to give the government 55% of it when I die.