Nov 12, 2009
How many years have small businesses and farms been trying to get the federal government to provide “death tax” relief?
We made some progress under the Bush Administration when the individual exemption which had been 1 million dollars per individual was raised to 3.5 million. That’s where we are now. Next year, the death tax is scheduled to disappear. Terrific! Only to reappear in 2011 when the exemption goes back to where it was in 2001 at 1 million dollars. Isn’t that crazy? The only way to beat it is to die next year in 2010. That’s a bad option.
In addition to the federal estate tax, you should check what kind of tax your state has on the books. The states are all over the place. Although some state relief would be welcome, don’t hold your breath. States that don’t have an estate tax wish they did, and those that do, aren’t going to cut the rate. They need the money.
That’s where the federal government is also. They aren’t going to stand by and watch the tax disappear next year. There is legislation introduced in the House to increase the individual exemption to 5 million dollars and reduce the top estate tax rate to 35 percent. That would provide a lot of relief.
But this government has such a full plate now, and so much debt that I’m afraid they won’t do that. I think they will simply extend the current 3.5 million exemption per individual through 2010 and deal with 2011 next year. That’s the easy way out.
I know this issue first-hand. My father died 12 years ago and I’m still paying off his federal estate tax. Let’s not forget that he paid taxes on that money when he earned it. Now the government wants to tax it again.
The obligation for family farms only gets worse as land prices escalate. If there is any support for family businesses, something must be done or big corporations will own everything.
Until next week, I am John Block from Washington, D.C.