There is no shortage of difficulties facing American farmers and ranchers. Low commodity prices, net farm income half of what it was four years ago, too much federal regulation some places — not enough federal regulation in other places (I’m looking at you, mega-mergers), increased healthcare costs, failing infrastructure.
It seems that every time you solve one problem, another slaps you in the face. One curious solution in search of a problem is estate tax repeal. How much is your estate worth; $1 million, $5 million, $11 million? If so, fear not — you don’t owe the federal government any money.
By the numbers, few people owe estate taxes. So why is it a marquee issue for some? The U.S. Department of Agriculture’s Economic Research Service estimates that 1.7 percent of farm estates would be required to file an estate tax form in 2016. Only 0.42 percent would have to pay the tax. The non-partisan Tax Policy Center estimates that only 80 farms and small businesses would be subject to the tax. Beyond agriculture, the impact of the estate tax is even less, affecting an estimated 0.2 percent of estates.
In 2001, the estate tax was set at $650,000, but it has grown to $5 million for individuals and $11 million for couples. There are also a significant number of exemptions and allowances tailored to agriculture that push the amount even higher.
We can live with the current exemptions and we could certainly live with the U.S. Senate’s proposal of doubling current exemptions. But we should not be willing to live without the lost revenue, paid by the ultra-wealthy, which is estimated to bring in between $240 and $350 billion in revenue over 10 years. The current House plan does just that.
Washington is debating significant tax reform, some of which is untested at the national level. Kansans have seen some of these experiments firsthand and are rightfully skeptical of promises of historic economic growth. Depending on which bill you are talking about, it could add $1 trillion to $1.44 trillion to the national debt, even when you factor in economic growth, which by the government’s own account is less than 1 percent. That would bring our national debt to well over $21 trillion.
Kansans have seen the steps taken to shore up budget shortfalls. Cuts to services were draconian and Kansans successfully rejected the Brownback experiment this past election.
So why give up billions in revenue so that wealthy estates don’t have to pay taxes? Why reject the wisdom of Thomas Jefferson, Theodore Roosevelt, Herbert Hoover, and others that warned against the idle rich and dynastic wealth?
If our financial house was in order, I suppose tax cuts, even for the rich, might make sense. If this was an actual problem for family farmers, I’d be the first to criticize this tax. But we are not and it is not.
This is a zero-sum game. Deficit spending will have to be offset by reduced federal spending. I’d rather rich estates pay than federal cuts to valuable programs be enacted. And don’t use my farm as an excuse to cut taxes for the wealthy. I will be able to hand down my farm just fine, and I suspect there is a very good chance you will, too.
Donn Teske is president of the Kansas Farmers Union and a fifth-generation farmer from Pottawatomie County.