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sdholloway56
Senior Advisor

Death Tax repeal

is the new Pepe le Pew. 

BTW, for well heeled farm families, about all a lower exclusion would accomplish is to make the old man let loose of some of the stuff for the younger members of the tribe sooner. Which isn't a bad thing at all.

The current system actually incentivizes holding it all tight until the second spouse is in the ground. 

Back to Don Kraft here, but the way to do it that best fits the principles of sound taxation is collect what can be hundreds of $Ts of deferred taxes for large farms upon the death of the second spouse- that's a real biggie that nobody talks about- that goes away with the filing of estate tax. 

And all unrealized capital gains, indexed for inflation.*

I'm of the opinion that a Family Farm or Homestead ought to be approximately the value of a nice cestion or a house in a nice, upper middle class place in CA- around $2M. As before, 100% marital exclusion- doesn't kick in until the second spouse dies.

*could make a bargain for family farms whereby there is a higher, or unlimited, exculsion for operating farms. But they have to keep the original basis, unindexed.

8 Replies
sdholloway56
Senior Advisor

Re: Death Tax repeal

Most fortunes are made up primarily of securities, which are not going to be held forever. They will pay up.

But the same should probably be offered for any closely held family business.

If, as happens, the business is someday worth nothing then they owe no tax.

rsbs
Veteran Advisor

Re: Death Tax repeal

hey doofus, maybe you should brush up a little on estate taxation. Securities held at death get a step up in basis and avoid tax confiscation also, just like prime farmland.

the sum total of what you doofus guys "just know" is amazing. you should start a chain of "just know" coffee shops where you can manage successful large acreage farms with just a few phone calls each year.

sdholloway56
Senior Advisor

Re: Death Tax repeal

I didn't say otherwise.

I said that a more equitable formula is that previously taxed assets (generally retained earnings, or savings*) not be double taxed but that untaxed capital gains be captured- that's the hidden scam in the estate tax in general terms.

*as I noted, in the case of farms a lot of retained earnings are actually deferred taxes. Need to tax that portion.

BTW, the last decade has sorta scrambled this but in general it remains true. A number of years ago a Purdue prof took several decades of farm records from the record system they mainatined and determined that prosperous farm families had almost no retained earnings. Net worth was a function of appreciated assets.

And I'm guessing that in many cases before 2006 they would have actually had negative retained earnings if you accounted for deferred taxes. People are smart, they or their accountants figure things out quickly as they move through a very competitive environment.

 

sdholloway56
Senior Advisor

Re: Death Tax repeal

Very few people ave their way to being multi-millionaires.

It is an important aspect, but not the key driver.

rsbs
Veteran Advisor

Re: Death Tax repeal

your words are still there. you wrote that most fortunes are made of securities holdings, which will eventually "pay up."

You may want to study how the rich in America actually hold on to their money through generational transfers, and how that "paying up" process actually works.

or just continue to "just know" and hate your successful neighbor with the "prom queen" wife that spurned you.

sdholloway56
Senior Advisor

Re: Death Tax repeal

Back round and around on an old argument.

But in the end, it is just a little complex.

We are, after all, a country where one party fairly recently elevated a white workin' feller to iconic status when he knew not the first thing about basic business organization or accounting.

"Heck yeah- when I get rich- and I'm gonna just as soon as I get caught up on child support- I don't want the dang gubmint taking it."

rsbs
Veteran Advisor

Re: Death Tax repeal

obviously it is too complex for you to grasp.

aljessen61
Senior Contributor

Re: Death Tax repeal


@sdholloway56 wrote:

is the new Pepe le Pew. 

BTW, for well heeled farm families, about all a lower exclusion would accomplish is to make the old man let loose of some of the stuff for the younger members of the tribe sooner. Which isn't a bad thing at all.

The current system actually incentivizes holding it all tight until the second spouse is in the ground. 

Back to Don Kraft here, but the way to do it that best fits the principles of sound taxation is collect what can be hundreds of $Ts of deferred taxes for large farms upon the death of the second spouse- that's a real biggie that nobody talks about- that goes away with the filing of estate tax. 

And all unrealized capital gains, indexed for inflation.*

I'm of the opinion that a Family Farm or Homestead ought to be approximately the value of a nice cestion or a house in a nice, upper middle class place in CA- around $2M. As before, 100% marital exclusion- doesn't kick in until the second spouse dies.

*could make a bargain for family farms whereby there is a higher, or unlimited, exculsion for operating farms. But they have to keep the original basis, unindexed.


Poor Hollowhead... Daddy didn't leave him a pot and he is too lazy to work for one. Good thing you don't have a window to throw it out of.