Don't know about New Jersey

Post #253,779

4/28/06 2:40:36 PM

I don't know about New Jersey, but in PA the question is about family farms. And despite the story floating around for some time and several organizations looking for stories to publicize, nobody has ever found anybody that actually lost their farm due to estate taxes.

I'll admit the problem is probably harder for other businesses then for farms, because in many cases even if you can't borrow the money or otherwise come up with it you can sell part of a farm. For a lot of other small businesses it would be an all or nothing prospect.

[link|http://www.washingtonpost.com/wp-dyn/content/article/2005/07/23/AR2005072300741.html|Washington Post]

The numbers that owed estate tax, the CBO found, were paltry, and the number without enough cash on hand to pay the bill even punier: In 2000, for example, just 1,659 farm estates had taxes due, of which 138 didn't report enough liquid assets to cover their tax liability.

And note that isn't 138 that lost their farms, that is 138 nation wide that didn't have enough cash on hand to pay it immediately.

I would agree that $1 million is too low a level for this tax to hit. Like most rates, the government set a fixed rate and doesn't adjust for inflation until enough people complain about it. Given what I have seen I would say $5 million or $10 million would be a better base line.

Jay

Post #253,783

by imric

4/28/06 3:18:00 PM

Selling part of a farm

PERMANENTLY damages the farm itself. It becomes less of a viable venture.

Imric's Tips for Living

Paranoia Is a Survival Trait
Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
Even though everyone is out to get you, it doesn't matter unless you let them win.

Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.

Post #253,787

by bepatient

4/28/06 4:29:46 PM

Lovely use of statistics

ONLY 1659 estates had taxes due and ONLY 138 were FORCED to borrow to pay taxes (9 months to come up with cash is the law).

So, on a venture that doesn't make alot to begin with, 138 last year were forced into MORE DEBT to maintain themselves.

All so you can "sock it" to the rich guys.

How about we throw in how many total farm estates there were so we could get a percentage of the total?

That might make that stat a little less comfortable for those trying to turn this into an urban myth. And all you have to do is look in the South Jersey papers to see the impact around here.

But, heck, its only a tradition we're squashing so we can "fairly tax" Bill Gates.

If you push something hard enough, it will fall over. _{Fudd's First Law of Opposition}

[link|mailto:bepatient@aol.com|BePatient]

Post #253,794

by JayMehaffey

4/28/06 5:25:24 PM

Figures where for 2000, current rate is lower.

The figures I mentioned where for 2000, the current tax rate is lower and the exemption higher.

The underlying report is here: [link|http://www.cbo.gov/ftpdocs/65xx/doc6512/07-06-EstateTax.pdf|CBO EstateTax.pdf]. I'm sure the figure your looking for is in there some place, I don't have time to read through it right now.

Jay

Post #253,798

by bepatient

4/28/06 6:34:26 PM

Re: Figures where for 2000, current rate is lower.

For farmers, business assets made up a much larger proportion
of estates\ufffd wealth: 51 percent in 1999 and 43 percent
in 2000. Liquid assets made up a smaller, but still
substantial, share of their estates: just over 40 percent in
both years. That smaller proportion of liquid assets suggests
that estate taxes may be more likely to exceed liquid
assets for estates of farmers, potentially requiring estates
to liquidate other assets. However, farm estates are generally
small, and the estate tax therefore consumes a smaller
percentage of the gross estate (an average of 11 percent
and a median of 9 percent in 2000). In fact, tax data
show that in 1999, about 12 percent of farmers\ufffd estates
that owed estate taxes faced a liability greater than their
liquid assets. In 2000, the corresponding figure was 8
percent.

That situation is more pronounced for estates claiming
the QFOBI deduction. Business assets made up at least
75 percent of those estates\ufffd wealth, on average.30 In addition,
the average tax owed was a higher percentage of the
gross estate for those estates than for estates in general (14
percent compared with 13 percent for all estates filing
returns). As a consequence, one-third of estates claiming
the QFOBI deduction and owing taxes in 2000 could
not pay the estate tax out of their reported liquid assets.
As before, the fact that liquid assets do not include some
trusts means that that figure represents the maximum
number of estates with insufficient liquid assets to pay the
estate tax.

So, of those farmers forced to file, about 10% of them were charged taxes IN EXCESS of liquid assets.

And for small business, that number was 33%.

Of course, soften the effect for the readers by saying "Maybe they had money socked away somewhere else to soften the blow".

This is lifted straight out of the report.

So, if you are a small business and you happen to be in the valuation range...1 in 3 shot puts you in the "forced sale" category.

If you push something hard enough, it will fall over. _{Fudd's First Law of Opposition}

[link|mailto:bepatient@aol.com|BePatient]

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