The National Call To Kill The Death Tax

[Hanta Yo]

Life insurance can pay the taxes.

Estate planning is something that should be done death tax or not.

Who is to say who can and cannot buy real estate? The last I looked in a free market the land sells to the one the owner says, usually the highest offer.

Land has long since passed the agricultural value it possesses. Land is an investment.

Certainly this is true, what about those who don't have life insurance? We still have ranch owners who have remembered the Depression and still live that way.

 

[Faster horses]

Thanks, Hanta Yo!! I will call, thanks to you!

Jason, have you looked into the price of those insurance policies lately?
We did and we decided our daughter would/could pay the inhereitance tax. Either way, you pay big time.

We need to kill this inheritance tax. And the capital gains tax is one I really hate. It doesn't JUST affect ranchers, it affects everyone that has property and has a choke-hold on our country.

Buy a house, fix it up, sell it and guess what the first tax you have to pay is? Not much incentive to invest in houses, visit the hardware store, the lumber yard, the supply store and spend money with them. Therein lies the big problem with capital gains tax. It is a deterrent for betterment.

 

[Cal]

Life insurance can pay the taxes.

Estate planning is something that should be done death tax or not.

Who is to say who can and cannot buy real estate? The last I looked in a free market the land sells to the one the owner says, usually the highest offer.

Land has long since passed the agricultural value it possesses. Land is an investment.

Why yes, that just makes the death tax A-OK! :roll: All we have to do is pay dearly for life insurance and more estate planning than would be practically necessary! Oh, and what the hell, land is just an investment...doesn't matter if it's been in the family for a century...sell it to the highest bidder! But the most important thing is to get those taxes paid...much to the delight of those who like to see things "evened up" a bit.

 

[Jason]

Just think about the consequenses if suddenly there is an agricultural exemption from a tax.

Developers that buy land would suddenly run enough cows to make them legitimate. Their lessened tax status would make losses acceptable. More losses in cattle makes it that much harder for you to compete profitably.

The original reason for a death tax was to keep wealth more equally spread out. Land barons would have to earn their holdings, even if it is from estate planning, they couldn't just inherit a huge estate and keep amassing wealth without work.

Funny thing is the more things change the more they stay the same. An article I read recently talked about those that inherit wealth. There is a real challenge for wealth to be maintained past the second generation. It is a case of easy come easy go.

I'm not saying it wouldn't be nice to get rid of capital gains or death taxes, but they are a fact of life, deal with them. Usually a government will introduce something worse if a tax like this is repealed.

What about older land owners that have no one wanting to carry on the farm/ranch? They want to retire but the land value has been capped at $150 an acre. Their health costs will make it impossible for them to live comfortably for more than 10 years, would that be fair?

 

[Red Robin]

I'm going to sound like T### here but the government is somewhat at a conflict of interest. They set the inflation rate to some extent with the availability of money and then they benefit from the inflation rate through capital gains. It shouldn't be so.

 

[Soapweed]

Just think about the consequenses if suddenly there is an agricultural exemption from a tax.

Developers that buy land would suddenly run enough cows to make them legitimate. Their lessened tax status would make losses acceptable. More losses in cattle makes it that much harder for you to compete profitably.

The original reason for a death tax was to keep wealth more equally spread out. Land barons would have to earn their holdings, even if it is from estate planning, they couldn't just inherit a huge estate and keep amassing wealth without work.

Funny thing is the more things change the more they stay the same. An article I read recently talked about those that inherit wealth. There is a real challenge for wealth to be maintained past the second generation. It is a case of easy come easy go.

I'm not saying it wouldn't be nice to get rid of capital gains or death taxes, but they are a fact of life, deal with them. Usually a government will introduce something worse if a tax like this is repealed.

What about older land owners that have no one wanting to carry on the farm/ranch? They want to retire but the land value has been capped at $150 an acre. Their health costs will make it impossible for them to live comfortably for more than 10 years, would that be fair?

I said nothing about "capping" land value at $150 per acre. All I am saying is that if common grazing agricultural land (that is worth a hundred and fifty dollars per acre) suddenly becomes "worth" $590 per acre, everything gets distorted. Keep in mind that land taxes are based on what actual selling prices are. For starters, a working ranch now has to pay yearly real estate taxes based on the $590 per acre. That makes it hard enough to make a living running cows, but then if someone in the older generation dies, the "death tax" is also based on the $590 per acre. There is no way that a succeeding generation can afford to pay a high estate tax, based on the distorted value of the land, and then proceed to keep on ranching.

If the death tax get eliminated, there would be hope that a ranch could continue being operated as a ranch instead of selling to someone who really does not care for the land.

 

[Brad S]

the problem with the death tax is it realy is a tax on hard working schleps. As Cal noted, you can spend the $20K and trust up for a couple generations, but real wealth routinely does this.

If you want to study inheritance schemes, review the exempt trusts of te drunk Kennedys. (nolonger available)

REPEAL the death tax so us hard working schleps pay the same as the drunken Kennedys.

 

[Denny]

Life insurance can pay the taxes.

Estate planning is something that should be done death tax or not.

Who is to say who can and cannot buy real estate? The last I looked in a free market the land sells to the one the owner says, usually the highest offer.

Land has long since passed the agricultural value it possesses. Land is an investment.

Hey Einstein you need to have money to invest in land before it's an investment otherwise it's an expence.How do you presume a fellow is going to pay for $1200 an acre land when it takes at least 5 acres to run a cow.Remember we pay our own health care here also.Ever heard of being insurance poor???????

 

[Tap]

:???:

 

[pknoeber]

For instance, there is the fifteen thousand acre ranch on the Cheyenne River east of Rapid City that sold recently. Land is so high (and it is taxed accordingly) that no working rancher could possibly afford to buy this place and ever expect to pay for it by running cattle. Instead, it sold to a very wealthy couple from Florida to be used strictly for hunting. The very marginal grazing land brought $590 per acre, when it is only worth about $150 per acre to run cattle on it. Who will be better for the local community, a working rancher or rich hunters who will only visit the ranch on rare occasions?

There will be many ranches that will sell out, because of the "death tax" that needs to be paid. The Ted Turners of the world, the Mormon Church, and other mega-rich outside investors will end up owning many of these properties. They will surely not support local communities as would the more "common folk" that would like to stay on the land, but can no longer afford to do so.

Soap, I'm not positive, but I'm 99% certain that in the event that the next generation continues to operate the ranch, the estate tax is based upon the ag use value, which is almost certainly waaaay under the $590/acre. This can reduce estate taxes by up to $412,000, at least that's what it was at when I was in ag law.
Or, another alternative is to value it using cash rent rate. Basically, average cash rent rate less the taxes divided by an average return, the average return is the 3 or 5 year average Farm Credit interest rate. So assuming cash rent of $10/acre and $1/acre taxes, with the average Farm Credit interest rate at, say 8% (not right, just used for example) this would set up the equation (10-1)/.08. Which would give $112.50/acre value on the ground.

What I'm getting at is that there are multiple ways/loopholes to get around estate taxes. Especially in ag, as long as 1/2 of the estate is ag related. I would bet that an estate would have to be in excess of 4-5 million to really see a large estate tax hit. And even then, with prior planning it can be minimized.

I am in favor of keeping the estate taxes. It keeps every generation on edge and working b/c we have to make it for ourselves. It keeps the economy dynamic and changing & it keeps rewarding the innovators. Take out the death tax & it makes it much easier for the haves to rest on their laurels & it will put up huge barriers to entry for the have nots.

You think land prices are bad now? Wait until the big guys have had 2 generations to pass down their land & wealth. And what do you think Ted T's estate will pay in taxes? Now take out that tax and see how much more money he has to bid up land prices. Estate taxes won't impact 80% of today's farmers, but the mega-rich want to use ag as the vanguard to mask the people that actually benefit from removing this.

How many people on here have heard stories about the rich people buying land & driving up prices? These are the people that will benefit the most from removal of the death tax. They are making multiple millions/year. How much did you make last year? Whose estate increased by the largest amount?

Sorry for the long rant.

Phil

 

[Tap]

And how many times does this money need to be taxed?

Our accountant told us recently that the Capital Gains tax will expire in a few years, and if it isn't renewed, the income will be taxed as regular income. That would or could be much worse yet. Don't vote for the liberals, or it will be. :wink:

The :???: emoticon wasn't aimed at you Denny. I agree with you. It's just that people that try to justify high taxes confuse me.

 

[Tap]

How many people on here have heard stories about the rich people buying land & driving up prices? These are the people that will benefit the most from removal of the death tax. They are making multiple millions/year. How much did you make last year? Whose estate increased by the largest amount?

Yes, but the secret amongst these "rich" people is that they hire the best people there are to avoid paying this tax anyway. I am not even saying that they shouldn't, but why do we have to have a system that we have to jump through all the hoops?

 

[Denny]

The state of Minnesota is self insured that means the pay no insurance preimiums just pay for damages as they come why??? Because its cheaper than paying insurance.Insurance is nothing more than legalized extortion.

 

[ranch hand]

Thanks, Hanta Yo!! I will call, thanks to you!

Jason, have you looked into the price of those insurance policies lately?
We did and we decided our daughter would/could pay the inhereitance tax. Either way, you pay big time.

We need to kill this inheritance tax. And the capital gains tax is one I really hate. It doesn't JUST affect ranchers, it affects everyone that has property and has a choke-hold on our country.

Buy a house, fix it up, sell it and guess what the first tax you have to pay is? Not much incentive to invest in houses, visit the hardware store, the lumber yard, the supply store and spend money with them. Therein lies the big problem with capital gains tax. It is a deterrent for betterment.

I read on here about this before. I called my accountant and he said if you get rid of the death tax and the land stays in the family you are ok. If you keep sell, the capital gains on the land will kill you more than the death tax. You lose the stepped up basis in the land, cattle and machinery if you kill the death tax. Something to think about before this passes. He told me we were better off with the death tax and to just try to get congress to raise the amount you can inherit before taxes.

 

[jodywy]

I Live in a high moutain valley , land prices have sky rocketed. All the death tax causes in farm and ranches to be sold off to pay the taxes and they get replace with sub-divisions, and consevation easment might save a ranch for one generation but the one after will be force to sell it.

 

[TSR]

Thanks, Hanta Yo!! I will call, thanks to you!

Jason, have you looked into the price of those insurance policies lately?
We did and we decided our daughter would/could pay the inhereitance tax. Either way, you pay big time.

We need to kill this inheritance tax. And the capital gains tax is one I really hate. It doesn't JUST affect ranchers, it affects everyone that has property and has a choke-hold on our country.

Buy a house, fix it up, sell it and guess what the first tax you have to pay is? Not much incentive to invest in houses, visit the hardware store, the lumber yard, the supply store and spend money with them. Therein lies the big problem with capital gains tax. It is a deterrent for betterment.

I read on here about this before. I called my accountant and he said if you get rid of the death tax and the land stays in the family you are ok. If you keep sell, the capital gains on the land will kill you more than the death tax. You lose the stepped up basis in the land, cattle and machinery if you kill the death tax. Something to think about before this passes. He told me we were better off with the death tax and to just try to get congress to raise the amount you can inherit before taxes.

Ranch Hand -- Good post.
A couple of things I have problems with: 1. Someone owns 15000 acres of land and is financially strapped??? Whose fault would that be?? Possibly true, but I believe this would certainly be the exception rather than the rule.
2. Repeal would hurt the middle class???? Not the middle class I am associated with- 40-60 hr a week working people. Like I said they/we would be the ones making up the lost revenues if the tax is repealed. You can count on that!
3. I have no class envy problem, as a matter of fact I admire people like Bill Gates-I have some of his "Life Rules" posted where I can loook at them every day.
4. Term life insurance rates are affordable for MOST people, especially when you have enough forethought to start planning early for your retirement years.

Ranch Hand, I believe the amounts have been raised and hopefully that will help keep the Death Tax from being repealed.

 

[Bullhauler]

Thanks, Hanta Yo!! I will call, thanks to you!

Jason, have you looked into the price of those insurance policies lately?
We did and we decided our daughter would/could pay the inhereitance tax. Either way, you pay big time.

We need to kill this inheritance tax. And the capital gains tax is one I really hate. It doesn't JUST affect ranchers, it affects everyone that has property and has a choke-hold on our country.

Buy a house, fix it up, sell it and guess what the first tax you have to pay is? Not much incentive to invest in houses, visit the hardware store, the lumber yard, the supply store and spend money with them. Therein lies the big problem with capital gains tax. It is a deterrent for betterment.

I read on here about this before. I called my accountant and he said if you get rid of the death tax and the land stays in the family you are ok. If you keep sell, the capital gains on the land will kill you more than the death tax. You lose the stepped up basis in the land, cattle and machinery if you kill the death tax. Something to think about before this passes. He told me we were better off with the death tax and to just try to get congress to raise the amount you can inherit before taxes.

You hit the nail on the head. I wonder if killing the death tax is possible right now? Why not just work on getting the caps raised higher and indexing it for inflation every year. Then if you need to sell or buy out your siblings they won't get nailed with the capital gains taxes.

 

[chilipepper10]

Taking from the haves to give to the have nots is called socialism. I never did nor will I ever agree with socialism in any form. :cboy: Saddle your own horse, rope your own steers, and don't be asking the gov't to do it for you.

 

[Tap]

Taking from the haves to give to the have nots is called socialism. I never did nor will I ever agree with socialism in any form. Saddle your own horse, rope your own steers, and don't be asking the gov't to do it for you.

Agreed.

At least the *$*# government could do is have something concrete that you could use to plan with. As it sets, this all expires in a few years if they don't renew it.

 

[TSR]

Taking from the haves to give to the have nots is called socialism. I never did nor will I ever agree with socialism in any form. :cboy: Saddle your own horse, rope your own steers, and don't be asking the gov't to do it for you.

So you want the tax repealed so that the Middle Class can then assume the burden that was formally applied to the rich????? Idon't call that giving to the have nots.

No class envy but just last night on TV I watched as the rich tried to outdo each other by seeing who could build the largest yacht. If I remember correctly one of the yachts was nearly 500ft. long with 108 full time employees. Interesting too, the show said that every day that Bill Gates wakes up he is 4million richer and that the rich were trying to find something to spend their money on. That could be one reason some of them are against repeal of the tax.