Kristi Noem and John Thune consistently cry about the estate tax—they always say “death tax”—as an assault on freedom (not to mention the fortune of maybe only 20 really rich South Dakotans a year).
But former Republican Attorney General Mark Meierhenry says the estate tax is “one of the great accomplishments of the Republican Party“:
The Republicans of 1909 enacted the estate tax to insure equality of opportunity. President Roosevelt explained the role of government to this progressive party. The role of government “at every stage, and under all circumstances, the essence of the struggle (by society) is to equalize opportunity, destroy privilege and give to the life of every individual the highest possible value.”
Equality of opportunity for all citizens should be the test to judge Republican political candidates. Today, the conservative wing seeks to preserve and expand the privilege of the few. The call to repeal the estate tax is a move to preserve privilege of the ultra rich not to leave life’s playing field [Mark Meierhenry, letter to the editor, that Sioux Falls paper, 2017.07.29].
This year, the dearly departed don’t owe the IRS anything unless they leave behind more than $5.49 million. The marital deduction (passed in 1948) allows the departed to leave all assets to a spouse and pay no estate tax. Billionaires like Sheldon Adelson can engineer complicated trusts to escape the estate tax (a popular business in South Dakota) and keep their wealth concentrated. The rich already have enough advantages; the federal estate tax is a useful check on the unhealthy concentration of wealth, brought to us by Republican Teddy Roosevelt.
and, as of 11:00AM, July 30th, 2017 no one has been able to come up with a name of a farmer that had to sell the farm to pay the estate tax.
Getting rid of the estate tax will give Walton heirs an extra 40 billion bucks. Just what they need.
Like Dolly Levi said: “Money, pardon the expression, is like manure. It’s not worth a thing unless it’s spread around, encouraging young things to grow.”
…. and if you leave it in a pile, it just stinks.
Or, this morning’s WaPo — https://www.washingtonpost.com/outlook/being-rich-wrecks-your-soul-we-used-to-know-that/2017/07/28/7d3e2b90-5ab3-11e7-9fc6-c7ef4bc58d13_story.html?hpid=hp_no-name_opinion-card-c%3Ahomepage%2Fstory&utm_term=.7790a90f1212
Never hold your breath or waste time hoping the current crop of Repubs to do something good for the masses/majority of people! They created and ARE Trump! They own him, coddle him, cuddle him, curry his private parts possibly and refuse to speak out against his tremendous excesses and lapses of knowledge of governing. There dang sure have been good Repubs like Teddy Roosevelt in the past and I hope they rise again in their party but won’t if the party members allow whats going on today to continue! An element of Repubs during Teddy R’s admin tried their best to eliminate the Forest Service along with his concept of National Parks! These are the same as the Trumpists today-only i’m thinking today’s Trumpists are dumber yet
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I’ve put this out there several times, but it’s usually off topic. Now it’s on topic. Here’s my thought:
Congress should get rid of the estate tax and instead impose income taxes on the recipients of estates. If one worked for daddy for 10 years and earned $100,000/year, he/she would pay income tax on that million dollars of income. On the other hand if that same person sat in prison for 10 years earning nothing and then received $1 million from daddy’s estate, the recipient would pay no tax whatsoever. None. Why should the inheritor have tax advantages over the worker? In both instances the money is new to the recipient (not previously taxed).
Our tax code has all kinds of perverse incentives. People like Donald Trump and Willard Romney are able to pay lower effective tax rates than middle income people as Warren Buffett once pointed out. Time for the pendulum to swing back and for sloth and luck and passive income to accrue at least as high a tax rate as work.
Republicans and the Estate Tax? I’ll take it over these FACTS:
Fact: The Republican Party was founded primarily to oppose slavery, and Republicans eventually abolished slavery. The Democratic Party fought them and tried to maintain and expand slavery. The 13th Amendment, abolishing slavery, passed in 1865 with 100% Republican support but only 23% Democrat support in congress.
Fact: During the Civil War era, the “Radical Republicans” were given that name because they wanted to not only end slavery but also to endow the freed slaves with full citizenship, equality, and rights.
Fact: Lincoln’s Vice President, Andrew Johnson, was a strongly pro-Union (but also pro-slavery) Democrat who had been chosen by Lincoln as a compromise running mate to attract Democrats. After Lincoln was assassinated, Johnson thwarted Republican efforts in Congress to recognize the civil rights of the freed slaves, and Southern Democrats continued to thwart any such efforts for close to a century.
Fact: The 14th Amendment, giving full citizenship to freed slaves, passed in 1868 with 94% Republican support and 0% Democrat support in congress. The 15th Amendment, giving freed slaves the right to vote, passed in 1870 with 100% Republican support and 0% Democrat support in congress.
Fact: The Ku Klux Klan was originally and primarily an arm of the Southern Democratic Party. Its mission was to terrorize freed slaves and “ni**er-loving” (their words) Republicans who sympathized with them.
Fact: In the 1950s, President Eisenhower, a Republican, integrated the US military and promoted civil rights for minorities. Eisenhower pushed through the Civil Rights Act of 1957. One of Eisenhower’s primary political opponents on civil rights prior to 1957 was none other than Lyndon Johnson, then the Democratic Senate Majority Leader. LBJ had voted the straight segregationist line until he changed his position and supported the 1957 Act.
Fact: The historic Civil Rights Act of 1964 was supported by a higher percentage of Republicans than Democrats in both houses of Congress. In the House, 80 percent of the Republicans and 63 percent of the Democrats voted in favor. In the Senate, 82 percent of the Republicans and 69 percent of the Democrats voted for it.
Fact: Contrary to popular misconception, the parties never “switched” on racism. The Democrats just switched from overt racism to a subversive strategy of getting blacks as dependent as possible on government to secure their votes. At the same time, they began a cynical smear campaign to label anyone who opposes their devious strategy as greedy racists.
Ol’Sar … Your last fact is opinion. It seems you’re trying to deny the racist element in your Republic Party. Hasn’t worked before. Won’t work now. Anyway, you’re off topic.
Even more Dems voted for Civil Rights Act that wingnuts and w/o those Dems there was no Civil Rights Act of 1964.
A number of racist Dems became the wingnuts of Nixon’s Southern Strategy while a number of wingnuts remembered they had a conscience and became the modern Dems.
The Klan of today and since the 60’s is a wholly owned subsidiary of the wingnut party. The klan became wingutty around the time of the 1st World War.
Concerning the inheritance tax/estate tax
I believe that Noem has made the statement that the estate tax cost her family dearly. On her telephone town hall recently there was a caller from Spearfish that made the statement that the death tax had completely wiped out their family ranch. Noem, of course, is lying because she is good at it.
However, the state of SD did have an estate tax until it was repealed in 2001. Perhaps some people conflated the state tax with the federal tax, not knowing the difference. Could happen with people that thought that the ACA was great, but Obamacare was terrible.
So before 2001 some people may have paid some estate tax. And you know for a repub to pay any tax is akin to getting wiped out.
Fact: Democrat Harry Truman desegregated the troops.
It is fascinating how contemporary republicans attempt to rewrite history while denying the history of the past 20 years.
Noem’s passion and misrepresentation on the estate tax is one of many issues republican use to lure low uneducated voters.
Most of South Dakota republicans have no idea that the estate tax will never affect them in any way.
It is my hope that after 8 years of promises from Noem that the estate tax is never repealed.
This would be another coup for Jackley and Sutton and show the voters how ineffective and wasteful it was to have Noem in congress.
mike from iowa,
Who did the KKK endorse in the 2016 presidential election?
And correct me if I am wrong, but I believe if the assets are in the names of both members of a couple before either’s death, that the threshold is actually $11 million before the estate tax kicks-in. Plus, if you are fortunate enough to have those kind of assets you would have to be a complete idiot to not set-up a “Dynasty Trust,” especially here in good old South Dakota. So that even if you had over $11 million in assets, you could still avoid federal taxation (….Gee, I sound like a Republican ;-) ).
This constant “Death Tax” scare by Senator Thune and Representative Noem is completely disingenuous. Because even the “20” most wealthy in South Dakota can hide behind a “Dynasty Trus”t and should if they and/or their financial advisors are not completely stupid. So this issue is nothing but a none issue for all South Dakotans; which sadly, members of our States congressional delegation cling on to play with the emotions of fellow South Dakotans with no true genuine political leadership in hand. This issue is nothing more than “Scare Tactics 101” from the RNC playbook and Thune and Noem should be ashamed to be a part of it…..
Roger C, I am gonna take a wild guess and say it probably wasn’t the Dem candidate the Klan endorsed, although there was a rumor a Grand Dragon or Wizard? from California claimed he changed his endorsement to HRC.
A few years ago, the Argus Leader ran a story about how you don’t need to live in SD to set up a trust. Residents of other states can set up a trust in South Dakota because they are iron clad and very confidential.
MaryD,
Exactly! So given that, there effectively is no true federal inheritance tax in this country…. Thune and Noem need to stop the fallacy!….. But then again, these are the same political leaders who used to promise “Repeal and Replace” too… ;-)
Rorschach – I think the “inheritance” tax you mention shakes out to be the same as the estate tax. If mom and dad are worth $20M, they pay 40% tax for all assets over the $11M exemption when they die, which is an effective tax of $3.6M – then the kids inherit the rest.
Under your plan, the kids pay the tax when they get the assets given to them. So the kids inherit the $20M and then pay 40% tax on everything they inherited over the exemption…so the IRS gets the same amount of money, and the kids get the same net inheritance.
JKC, Sr. – not to be nitpicky, by dynasty trusts are set up by a person to pass assets to their descendants and avoid the assets being taxes against the descendants when they die – the person who set up the trust is still in the same position he would have been without the trust. If the asset was his and he puts it in the trust, it is either still included in his taxable estate anyway or it isn’t included in his estate but his exemption is reduced by the value of the asset he put in the trust. So dynasty trusts help you plan for future tax avoidance, not current tax avoidance. There are many other ways that wealthy people use estate planners and accountants to avoid the estate tax for themselves, so you are right about that.
MFI –
If you work in the field, everyone knows at least a few farmers who passed away and the family had to sell land to pay the taxes. Usually it’s the estate tax, sometimes it’s income tax, but it definitely happens all the time in SD, MN, and IA, and I’m sure all other agricultural states. And just like any other taxes, a little pro-active planning can make a big difference and can mitigate or eliminate most taxes.
Ryan,
I appreciate you comments, but isn’t the discussion germane to the taxation of ones estate after their death and not the income you realize during ones life time? But I would definitely agree with your comment about using estate planners and accountants during ones life time to void taxes as well, which is a whole other issue in and of itself, that needs to be address to achieve greater tax equity.
Let me also say, that I also very happy to read that the former SD Attorney General has raised this concern and invoked the progressive ideas of a past Republican like Teddy Roosevelt as well. Because many years ago back in February of 1981, I remember hearing this same former AG at a SHED DAYS event (Student Higher Education Days) in Pierre proudly proclaim, that the era of “Dust Bowl Politics” had finally come to an end with the recent election of Ronald Reagan to the White and with the Republicans having taken back control of the US Senate for the first time in 26 years with the help of new senators like Jim Abdnor from South Dakota. And the reason I bring this memory recall to attention is because I believe it was with the ushering-in of the Reagan Era and all of its supply-side nonsense, that is greatly responsible for empowering in time and place, and even to this day, the non progressive and nonsensical ideas like the repeal of the inheritance tax. So it is good to see that the former AG has come to recognize the value of progressive politics and especially in his own party, and the destructive cost of concepts such as the repeal of the inheritance tax, which is merely a bad idea, that has over the last 35 years caught a ride with the bad economic politics of supply-side economics itself, which from day one of the Reagan Era was at great odds with the progressive politics of Teddy Roosevelt…. A cousin I might add, to FDR, who I guess we would all agree, whether it be 1981 or 2018, was the “Father of Dust Bowl Politics” itself….
Now some may say that my above mentioned comments are academic at best given the $ 11 million threshold and the idea of “Dynasty Trusts,” but to answer that criticism, I think we must first preserve the existence of the inheritance tax, take another look at the $ 11 million threshold, and then return the “Rule Against Perpetuity” in order to end “Dynasty Trusts” as we currently know them….
Ryan-you need to read this- https://www.washingtonpost.com/news/fact-checker/wp/2015/04/14/the-facts-about-the-estate-tax-and-farmers/?utm_term=.eff8abac57bc
It quaotes a Senator named Marlboro Barbie…..excuse me….John Thune saying he does not know of a single farm that had to be sold to pay the tax. Zero, zip, zilch.
Neil Harl from ISU nails the fallcies of wingnut’s push to get rid of the tax and who (the wealthy naturally) will be the biggest benefactors. Harl has tracked this issue for like forever.
My keyboard misspells many words when it gets excited. I hereby humbly apologize for my keyboard’s spelling mistakes.
MFI – from that article:
“Thune’s staff conceded that they could not identify a single farm that had been sold because of the estate tax, but they said some farms had to sell acreage in order to pay the tax.”
They are just being cute with the wording. They admit some farmers had to sell some of their land, but they won’t admit that is the same as selling the farm.
That makes sense, though. If a person dies and has to pay estate tax of 40%, you don’t have to sell 100% of the assets to pay that tax. You just have to sell some.
Farmers, like any other business owner, have to make the hard decisions – either take the time to talk to professionals who can help, or wait-and-see. Wait-and-see gives the IRS more of your stuff 100% of the time.
I’m not a fan of the IRS by a long shot, but of all the crazy taxes and loopholes, the estate tax is one of the least confusing and impacts so few people it seems odd to focus on so specifically.