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 story as “outdated, misleading, and abusive.”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 class” tax 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.
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.