Special Reports: Tax Talk

The Death Tax Lives Again

On top of the decrease in funding for production agriculture and conservation programs and the unpopular cap-and-tax legislation President Obama and Speaker Pelosi are trying to push on Americans, farmers and ranchers across the country will soon be facing yet another burden – the reinstatement of the death tax.

The death tax, also known as the estate tax, is an additional tax imposed on the transfer of the estate of a deceased person or the payment of certain benefits to beneficiaries. Most, if not all of these assets have already been taxed – whether through the income tax, the capital gains tax, the dividends tax, etc – the deceased has already paid the federal government for these assets. But, because the estate will be passed on to a new person, the federal government intends to tax them once again on their new assets. In essence, it's a double tax – a tax on dying. This death tax is unfairly burdensome on family farms, who pass on their land and crops from generation to generation.

This punitive tax was reduced annually through the 2001 and 2003 tax cuts resulting in the elimination of the death tax by 2010. However, if these tax cuts are not renewed the rate will go back up to its original amount for 2011 – with the top tax rate a whopping 55%.

There are many of my colleagues from the other side of the aisle who claim this is a tax on the "super rich" because it only includes estates valued at one million dollars or higher. To most of us, a million dollars is an amount we will never see in our lives. However, many small business owners and farmers file their business income as individuals, knocking them into this higher income bracket and burdening them with this excessive tax. For example, families own 97% of the commercial farms in America. If family members are unable to pass on their way of life to their children and grandchildren or if family members are forced to sell much of their farmland to pay these new exorbitant taxes, we could see the end of the family farm.

Next week on "Tax Talk," I will discuss the dramatically higher capital gains and dividends tax rate and what that could mean for our markets and financial system. If you would like to keep up with the special report, I encourage you to visit my website at www.house.gov/lucas and select "Special Report: Tax Talk."

*The complete list of salaries from the Oklahoma State Department of Education can be found at http://sde.state.ok.us/Teacher/Salary/default.html.

 

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