Sen. Lincoln and the Multi-Millionaire Farmer
by Adam Hughes*, 4/8/2009
The estate tax just can't seem to stay out of the headlines lately. First, the New York Times ran another great editorial this morning browbeating the 10 Democratic and 41 Republican senators who voted to increase tax cuts for multi-millionaires last week. The Times held particular scorn for Sen. Blanche Lincoln (D-AR), who tried to justify offering the amendment to reward the super-rich saying it was really about small businesses and job creation. From the editorial:
The implication is that upon the death of an owner, estate taxes typically devastate small businesses and the jobs they provide. That is swill.
The Times editorial board quoted new numbers published by the Tax Policy Center (TPC), a respected, non-partisan collaborative between the Urban Institute and the Brookings Institution. Len Burman, one of the directors of the TPC blogged this morning about the updated estate tax numbers they crunched:
An always charged issue is how the estate tax affects small farms and family-owned businesses. We estimate that under the Obama proposal, 100 family farms and businesses would owe tax. (We define such estates as those where farm or business assets are valued at under $5 million and comprise the majority of estate assets.) The Lincoln-Kyl proposal would cut the number to 40. Even under current law, fewer than 2,700 family farms and businesses would owe tax.
So the long and the short of it for Lincoln appears to be the 60 farms and family-owned businesses around the country that would be spared by her amendment. I'm guessing there is one or maybe two business in Arkansas that would actually not have to pay the estate tax because of the efforts of Sen. Lincoln.
The real beneficiaries of her efforts are the heirs of those estates worth more than $10 million who will continue to have to pay the estate tax, albeit at a much lower rate. Her amendment would cut the rate from 45 percent to 35 percent, saving those already rich and privileged individuals - such as the heirs of the Sam Walton fortune - millions of dollars. Len Burman again:
The vast majority of the tax is owed by large estates. Almost 84% of the tax would be paid by estates larger than $10 million in 2011 under the Obama proposal. About half of the tax is paid by such large estates under current law. Under the Lincoln-Kyl proposal, the tax is even more concentrated.
Is this really how we want to be spending our increasingly scarce resources?
NYT: Guarding the Family Fortune
TPC: Udpated Analysis of Estate Tax Impact
Image by Flickr user studio08denver used under a Creative Commons license.