ag94whoop said:
topher06 said:
culdeus said:
topher06 said:
culdeus said:
Gap said:
culdeus said:
Equity and equity components of liquid assets likely need some level of estate tax.
Why? And why is your class of asset more important than another? The capital that I've create for my hiers is valauble. Just because I've chosen a more liquid asset class, shouldn't make me your target.
And won't investments simply be created to move money to land right near a person's death. I'll just have the person with my power of attorney execute it at the last minute.
That's why the caveat is the land needs to have demonstrable farm type income paper trail. Similar to how Crummey Trusts are structured to get around the UTMA restrictions where you don't want some tattooed up SJW guy taking all your kids annual gifting at age 18.0001. Crummy still requires this type of paper trail or the SJW can walk off with it.
And I would 100% argue that it is a completely different ballgame passing down passive equity vs. income and W2 generating businesses. There can and should be protection for that. Sorry if the gubmnent comes for your stonks.
If estate tax exists, nothing should be categorically excluded outside of a dollar value exemption. The family farm is no different than a stock portfolio.
Agree to disagree here.
Should Bezos be untaxed while Joe Upper-Middle-Class gets hit, simply because Bezos owns stock in the company he works for? Is this really just about farm versus non-farm?
The problem is your using literally the wealthiest man in the world as a comparison. He probably would find some loophole anyway. People that rich never get touched. It's the families with generational growth and earnings that get nailed. And the problem is liquidity. A stock portfolio or cash asset can be pie-cut to pay taxes a LOT easier than a family farm or ranch. Dividing up property to pay taxes never works, and often kills the potential profits of the very entity they are trying to protect.
I'm not saying one is more important than another, but liquid assets are significantly less affected in operational continuance than fixed and land based assets. If a family farm needs 500 acres to be profitable and is squeaking by, selling off 200 acres to pay inheritance taxes essentially kills the business as a whole. Then guess who gets it? More big corporations.
He could have easily chosen someone worth $25 million but we wouldn't have known that person.
You're right a stock portfolio is much easier to divide and value. But it shouldn't be disadvantaged relative to any other asset class. All of these are just assets. The estate tax exemption helps protect the family farm, business, ranch, real estate holdings, stock portfolio's, etc. And the current threshold ($11.58 million for a single person) is actually pretty high when you think about what classifies as being in the 1% of wealth ($11.1 million). But one asset class shouldn't be tax protected over another just because it's illiquid. Also, there are already special provisions for farms and closely held businesses that spread the tax payments out over time (14 years at low interest rates).
When you think about the family farm, it would have to be worth $23.16 million (i am assuming that the farmer is married or a surviving spouse) or more in order to be taxed. Ignoring the valuation debate (government's value is probably lower than actual value), if we assume the property is worth 30 million (with no debt on the property), only the 6.84 million is taxed @ 40% (if they pay the full statutory rate). Meaning the resulting tax bill on the estate is $2.736 million that can be paid over 14 years. I don't think that's an unreasonable tax bill. Keep in mind, this estate has likely appreciated over decades and there were never any capital gains taxes paid on that value appreciation. In fact, unrealized capital gains accounts for about 55% of all estates that pays taxes per the Federal Reserve. So the argument that all this money has already been taxed is actually incorrect.
The reality is very few farms and family businesses are impacted by the estate tax. In fact, in 2017, only 5500 estates (of 2.7 million) owed estate tax. An of the 5500, only
80 of those were small businesses or farms and this was at the lower threshold (5.49 million per person, 10.98 per couple).