New legislation that jumps the death tax to 55 percent of estates exceeding $1 million threatens 526,421 family farms, of about 25 percent of all farms in America, according to a Senate analysis.
According to the analysis from the Senate Republican Policy Committee, chaired by Wyoming's John Barrasso:
If President Obama and Senate Democrats do not act [to stop this new tax], the federal government will begin taking more than half the value of family farm estates exceeding $1 million beginning next year. This summer, Majority Leader Harry Reid and Senate Democrats passed legislation (S.3412) on a party-line vote that allows Washington to take up to 55 percent, a huge increase over today's top rate of 35 percent, and drop the tax's exemption from $5.1 million to $1 million. The lower exemption -- combined with soaring farm real estate values -- could put more than 420,000 additional farm estates at risk from the death tax.
Farm values are largely tied up in non-liquid assets like land, buildings, and livestock. Many farm and ranch families would be forced to sell their assets to satisfy Washington Democrats' insatiable appetite for tax money. Up to 24 percent of America's farm and ranch families could be forced to hand over a large chunk of their heritage to the Internal Revenue Service when a family member dies. This would economically devastate rural communities.
Welcome to the heavy-handed and confiscatory nature of the Federal Government. I've said it again and again that Big Government is a threat to your liberty! It doesn't happen all at once, but one step at a time. First ObamaCare ruins the medical business by driving doctors out of the business and driving up costs, then inheritance taxes rise. Next up: Cap and Trade which is about taxing and not about warming.
Higher death tax will also affect small business creation. One of the reasons that individuals and families create a business is in the hope that it provides a livelihood for the next generation. That can't happen when you have to sell the business to pay the confiscatory 55% tax. Potential entrepreneurs will already pay over 50% of tax to the government (including FICA and Medicare taxes) and now anything that they create must likely be liquidated to pay the inheritance tax. Some will say "why bother?" I don't blame them.
Remember, if you have a significant net worth, it's done after tax: after income tax, after sales tax, after dividend and interest taxes. Then after you die, you have to pay 55%?? Of course, this will force entrepeneur's to do something to avoid the tax. They will find a way.