Keeping The Family Farm Just Became More Difficult

Tax expert Curtis Dubay recently wrote at The Daily Signal that Obama is attempting to sneak a tax hike into law during his twilight days. His Treasury Department unveiled midnight regulations that essentially would increase the death tax to 30 or 40 percent.  How is this possible? By tinkering with well-established “valuation discounts” that families use to calculate their death tax liability.  You see these valuation discounts are one reason family businesses have been able to accurately calculate the burden of the estate tax, also known as the death tax.  With accurate calculations the business or farm itself can be passed from generation to generation.

Imagine these valuation discounts didn’t exist.  Upon the death of an owner,  a business would have to overvalue itself, resulting in a higher tax bill than the law intends. Farms in particular are affected by this issue, and the estate tax generally, because it is a lot harder to sell off 40 percent of your farm than 40 percent of stocks or other assets to pay the unintended higher tax bill.

Here is a concrete example:  You are a partial owner, say 1/10th, of the farm your grandfather spent his life working and building. What eventually happens to us all, there is a death in the family and the death tax is calculated.  You owe a lot of tax – 40% of your ownership is due and payable within a short period of time or you incur further penalties.  You have a choice, either sell off your share for much less than it is worth or pay the government 40 percent of its value.

For family-owned businesses/farms, built with the blood, sweat, and tears of ancestors, this is an immoral choice for the government to force on people.

Will the mega rich or well informed pay these higher taxes?  Of course not.  Why not?  If you want to know we can help you find the answers.