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Holes in Noem’s Estate Tax Tale Getting National Attention

Last month the SDGOP spin blog huffed and puffed about Rep. Susan Wismer’s characterization of Congresswoman Kristi Noem’s tired old “estate tax nearly took my farm!” story as “outdated, misleading, and abusive.”

But with Noem now using her family’s sad tale to include repeal of the estate tax in Congress’s “forget the middle classtax treats for the Trumps, Huffington Post and USA Today have come out with detailed columns supporting Rep. Wismer’s point and explaining why Congresswoman Noem’s story just doesn’t check out.

First, let’s look at the story as Noem told it on the House floor in 2015 about the accidental death of her father, Ron Arnold, in 1994, and the Arnold clan’s swiftly ensuing estate tax problem:

On March 10 of 1994, my dad was killed in an accident on our family farm. I was taking college classes at the time. I was 21 years old, and I ended up coming home with my family and trying to figure out how we were going to get by without him after this tragedy hit our family.

All I could hear during that point in time were the words that my dad had said to me for many years. It wasn’t very long after he was killed that we got a bill in the mail from the IRS that said we owed them money because we had a tragedy happen to our family.

One of the things my dad had always said to me is, “Kristi, don’t ever sell land, because God isn’t making any more land.”

But that was really our only option. We could either sell land that had been in our family for generations, or we could take out a loan. So I chose to take out a loan, but it took us 10 years to pay off that loan to pay the Federal Government those death taxes [Rep. Kristi Noem, remarks, United States House of Representatives, 2015.04.15, Congressional Record Vol. 161, Number 55, pp. H2275–H2286, retrieved 2017.12.11].

On policy, Huffington Post correspondent Arthur Delaney explained that Noem’s 1994 story has almost nothing to do with how estate tax works today:

…Under current law, the estate tax kicks in when a person dies only if their estate is worth more than $5.49 million after deductions. In 1994, only the first $600,000 of a taxable estate was exempt, so the tax has gotten a lot less stringent in the years since Noem’s father died.

Another important feature of the law, both now and in 1994, is that the full value of the estate can be transferred to a surviving spouse tax-free. Noem’s mother was still alive when her father died, but the family may have missed out on the unlimited marital deduction due to bad luck.

“My dad had done estate planning, he had had a will completed, but he hadn’t gotten it signed before he was killed,” Noem told HuffPost on Wednesday.

Under South Dakota law in 1994, if a decedent hadn’t signed a will, then only one-third of the estate would transfer to the spouse, while two-thirds would go to the children, according to Dan Donohue, a South Dakota attorney who has specialized in estate, trust and probate law for more than 40 years.

…South Dakota changed its “intestacy” law the very next year, in 1995, so that in the absence of a will, the surviving spouse would automatically receive a decedent’s full estate so long as the surviving children are children of the spouse [Arthur Delaney, “Kristi Noem Says Her Story Shows How the Estate Tax Hurts Families. Not Quite,” Huffington Post, 2017.12.07].

On narrative, Noem seems to have juiced her story by shortening her time frame and her options list. Chuck Collins, director of the Program on Inequality at Institute for Policy Studies, explains that the Arnold clan normally wouldn’t have received a bill in the mail for nine to fifteen months:

Another oddity in Noem’s story is that the IRS doesn’t send a bill for an estate tax without a tax filing. In 1994, families had nine months to file a return with the option of filing a six-month extension. The conservative canard that the taxman shows up at the funeral is emotionally gripping, but simply false. The law at the time allowed farms to defer estate taxes for up to five years [Chuck Collins, “She’s the Poster Child for Estate Tax repeal, But Her Sad Family Saga Doesn’t Add Up,” USA Today, 2017.12.11].

As for the loan Noem says her family had to take out, Collins says the Arnold clan could have gotten a better deal from the IRS:

In the event that the Arnold family did owe taxes, the IRS had flexible installment plan at an interest rate lower than any lender. There would have been no need to get a loan from a third-party [Collins, 2017.12.11].

Collins notes that Noem and her relatives figured out how to finagle over three million dollars in farm subsidies from the federal government since 1995. Add the income Noem and her husband have made selling federally subsidized crop insurance, and it seems that Noem is telling a very selective narrative about the role of government in her family’s life. For years, Noem may have stretching the facts around the estate tax costs that resulted from her family’s poor financial planning. Meanwhile, she has studiously ignored the federal government’s unbegrudging generosity in the form of millions of dollars and subsidies and income (oh yeah: $174K a year as Congresswoman for seven years isn’t bad).

Readers of this blog have viewed Noem’s sad estate saga with suspicion for years. Now that Noem’s sob story is part of the Republican propaganda push to Trump-size the national debt, we should expect the national press to test the holes in that story.


  1. Rorschach 2017-12-11 21:55

    A fine expose of the way Rep. Noem has bent and stretched the truth to fit her partisan purposes. It’s about time the truth came out. Unfortunately we don’t have an inquisitive South Dakota press so we have to rely on out-of-state media to fact check our GOP Pinochios.

  2. jerry 2017-12-11 21:58

    Guess what NOem is getting for Xmass? Yup, something that she is damn good at. We have been watching that spud on her grow for years now, so some things never change. NOem is a fibber through and through.

  3. John 2017-12-12 04:25

    Tell a lie loud and long enough and people will believe you. NOem has a future at this rate.

    And ask yourself where was the clueless, uniquizative SD media, for years? Were they too busy publishing photos of giant check transfers?

  4. Rorschach 2017-12-12 04:54

    “The rich will avoid this tax. They have the resources to do that. But it hits families like mine harder than ever.” Kristi Noem.

    Where to start dissecting this lie? It doesn’t hit families “harder than ever.” The estate tax exemption in 1994 was on the first $600,000. Now it’s on the first $5.49 million.

    If “the rich will avoid this tax”, it wouldn’t be bringing any money in. It’s obviously bringing money in. Later she says “it’s double taxation” which is also a lie. The tax essentially reduces what beneficiaries receive from an estate, and beneficiaries have never paid taxes on that money. Moreover, the decedent may never have paid taxes on much of that money – especially if the decedent is a farmer (Like Noem’s father) who bought land that appreciated in value for which the beneficiaries receive a stepped-up basis at death.

    How does that pledge go? Tell the truth, the whole truth, and nothing but the truth. Rep. Noem fails that. One way to lie is to tell a partial truth with the purpose of misleading. Rep. Noem does that over and over again in the video Cory linked.

  5. mike from iowa 2017-12-12 12:50

    Must be some mighty big holes in Social Security’s 2 % raise for this year. According to SS my new raised rate will be $2,20 per month less than this year’s rate.

  6. HydroGuy 2017-12-12 13:25

    Updated (through 2016) stats for the Noem/Arnold operation:

    Of course, those figures don’t even take into account taxpayer-subsidized crop insurance premiums. Verbatim from the EWG website:

    “Taxpayers subsidize much of the cost of crop insurance in three ways. First, taxpayers pick up about 60 percent of the policy premium according to the Congressional Research Service. Farmers pay only 40 percent. Second, the federal government reimburses private crop insurance companies for their “administrative and operating” cost at between 22 and 24 percent of total premiums, again according the Congressional Research Service. Finally, taxpayers are liable for a significant share of the payments that go to producers in the event of a yield or revenue loss. As losses mount, the share of the losses paid by taxpayers increases.”

  7. Cory Allen Heidelberger Post author | 2017-12-12 19:07

    $3.7 million—thanks, HydroGuy, for that EWG link! $3.7 million from Uncle Sam to keep Racota Valley Ranch afloat… and 77% in commodity subsidies.

    Do you get the feeling Kristi’s whole career is just about making the government pay for having the gall to tax her family?

  8. Roger Cornelius 2017-12-12 19:30

    And Kristi complains about the national debt by adding to it.

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