Two thirds of South Dakota’s Congressional delegation marks the weekend press-releasing about the pleasure of shooting the state bird. Senator John Thune shot that wad last weekend, so this weekend he has to get back to acting like an elected official instead of a marketing twit by talking about policy. Alas, our senior Senator’s weekend column is another screed trying to trick regular folks into backing one more handout for the rich, the repeal of the estate tax.
Thune lost some ground on his “death tax” argument earlier this month when his seat mate Senator Mike Rounds said repealing the estate tax isn’t necessary. Faced with the fact that the estate tax affects maybe 20 super-rich South Dakota estates each year and that most South Dakotans are millions of dollars away from ever paying it, Thune resorts to “one is one too many” absolutism:
In my opinion, one family-run operation that’s forced to sell because of the death tax is one too many. Now is the time to bury the death tax once and for all, and I’ll continue my years-long fight to do so in the tax reform bill I’m working on in the Senate [Sen. John Thune, weekly column, 2017.10.20].
One shooting with one gun should be one too many, but Senator Thune shrugs off that ill as the price of rootin’-tootin’ freedom, better solved by personal tactical responses than the repeal of anything.
Thune is trying to escape the fact that the harm he’s exaggerating is statistically insignificant. Let’s see how many “farmers” paid estate tax last year:
In 2016, only 682 taxable estates—or just 13% of all taxable estates—reported having any farm assets at all, said Beth Kaufman, an estate lawyer at Caplin & Drysdale and former associate tax legislative counsel at the Treasury Department.
And those farm assets represented just a small percent of the gross estate values on average. That suggests that for many in this select group, the farm was not the sole—and maybe not even the primary—source of income. It also suggests there may be other assets to tap if needed to pay an estate tax bill.
For example, Kaufman noted, farm assets represented just 5.4% of total assets on average in taxable estates worth between $5 million and $10 million. That drops to 3.6% for estates worth between $10 million and $20 million, to just under 2% for those worth between $20 million and $50 million, and to 1.5% of estates valued at more than $50 million [Jeanne Sahadi, “No, the Estate Tax Isn’t Killing Family Farms,” CNN Money, 2017.10.10].
Even the “poorest” estate tax payers are only holding 5.4% of their wealth in farm assets. For every dollar of farm assets, those taxpayers have 17 dollars in non-farm assets they can use to pay off whatever estate tax Uncle Sam is asking for.
Realizing he still can’t give a single example of the estate tax taking away a single family farm, Senator Thune has to resort to the subterfuge of saying that the farmers can only avoid the estate tax by spending enormous sums on accountants and estate planners:
For supporters of the death tax, their favorite talking point is that it hits a small number of family-owned businesses, farms, and ranches each year, as if that somehow justifies a confiscatory tax on a larger swath of Americans. What they conveniently fail to mention is the large expense – both in time and money – that farmers and ranchers invest during their lives to avoid being a death tax statistic. Too often, these folks have to hire costly lawyers, accountants, and estate planners, all of which can cost well over one hundred thousand dollars, to develop an effective estate plan. They can also spend tens of thousands of dollars each year in life insurance premiums – again, all just to avoid being a victim of the death tax [Thune, 2017.10.20].
By that argument, Thune could justify getting rid of all taxes (and doesn’t every tax “confiscate”?) that require all Americans to spend time and money preparing their returns, which is anarchistically absurd. The estate tax doesn’t just fund public services; at least as importantly, it helps reduce the concentration of wealth that poses a threat to democracy. Perhaps we can find ways to make it easier to pay without hurting the few farms it may impact (and we already do that). But arguing that a few wealthy pals want don’t want to pay as much for their tax lawyers isn’t the most statesmanly argument I’ve heard for repealing a tax.
But we know better than to expect statesmanship from Thune. He’s just tooting the pro-rich-man horn that keeps his donors and corporate minders happy. It’s too bad the only topic Thune and the rest of our Congressional delegation can discuss with authority and honesty is pheasant hunting.