Many people are unaware of one of the lesser known consequences of the most recent presidential election. Estate tax rates jumped to 55% from 35% while the exemption dropped from $5 million to $1 million.
What does this mean, you say? Why should you care? Let me give you a hypothetical to explain:
“John Doe was a salt of the earth man. You know, the kind of man you could meet at the local diner and truly enjoy talking with. He farmed all his life on property handed down to him by his father and from his father before him. At his death, Mr. Doe was 86 years old and owned 500 acres of land. His real estate alone was worth $2.5 million. John had one son, Jack, to whom he left his farm. As with many farmers, his wealth was primarily in his land. Without the land, there would be no farm, without the farm, John could not have provided for his family. John paid real estate taxes on the farm for years. His ancestors paid taxes on the real estate long before him. John was always a productive member of his community. In fact, many people swore the milk he produced was the best around. John never asked for and never received government handouts.”
If John had died in 2012, there would have been no federal estate tax paid on the transfer of the property to Jack. However, John died after January 1, 2013, only $1 million of the $2.5 million is exempt from taxes, with the remaining $1.5 million being taxed at the new rate of 55%, resulting in a tax bill of $825,000.00 for the federal government. Jack, as the executor of his father’s estate is forced to sale at least 165 acres of his family farm to pay the tax bill to the government.
I recognize that to many of you, who, like me, do not have to worry about having such a large estate, are saying “so what”, they can afford it? First, I do not care how wealthy a person is. That fact, alone, is not a justification for taking more money from them. For farmers, in particular, they are often required to accumulate land in order to make a living. We, Americans, get our fruits, vegetables and meats from these hard working people. If we continue to take from them in this unjust manner, they will soon realize that there is no profit in working so hard and they will stop farming. Who will do it then? You? Are we simply going to import our food from China too? Think about this. It is a problem for all of us.
Second, this liberal socialism agenda that is overtaking our country (see more in upcoming post) has an express desire to stop individual land ownership. Do you understand what that means for all of us?
So, in conclusion, it does not matter whether you or I will ever have to worry about estate tax issues on a personal level. This is an injustice to our hardest working fellow Americans. This is legalized theft authorized and required by our own government. It must stop before it is too late.