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centralillinois
Contributor

Re: Two points Don

Not only do we have a 2 million dollar exemption per couple but if your heirs farm there's an additional exemption if they continue to farm for a decade. 

 

For the last thirty years our tax code has been changed to allow for investors to have a competitve advantage when purchasing land.  As a result, a much lower percentage of farmland is being bought by producers. 

 

In 1980 the top marginal tax rate was reduced from 70%.  Today the top rate is about 35%.  The wealthiest investors now have more after tax income to purchase land. 

 

And in the early eighties the most social security tax farmers had to pay was about $ 3200.  Today we can pay up to $16,000 towards social security.  Investors do not have to pay social security taxes on profits from farmland, unlike farmers. 

 

Take a look at who's been purchasing land in your neighborhood.  A millionaire doesn't have a chance in today's market.  You have to be a multi-millionaire to make a bid.  If the tax stays at $1 million heirs of investors will eventually have to liquidate some parcels which will eventually lead to a price correction.  We may actually see young farmers purchase land instead of rushing an investor after a sale and bidding himself to failure. 

 

Farm Bureau?   Farm Bureau leaders do a very good job representing FARM BUREAU LEADERS.  They usually have a much higher net worth, net income and farm more than the average member.   So just who are they representing when they advocate no inheritance taxes? 

 

The best thing that could happen to agriculture is to let the inheritance tax stay at $1 million.  By taxing heirs of wealthy investors farmers will now be in a better position to purchase land when the price decreases.  Farmers need to own land, not investors.

BA Deere
Senior Contributor

Wonderful, Schurrbart

Let`s work with your example. If in 1970 you instead of buying the car you took your $2100 and bought 3 acres, in 1980 those 3 acres would be woth $9,000, you couldn`t even buy a new MGB that sold for $13,000 as you could have with your orginal $2,100...See! ....Now why in the name of our Lord should you have pay capital gains tax??!!??  And here`s the kicker, let`s move the decimal point on the acres and prices reflecting a farm. Also assume you unfortunately passed away, your heirs would have been soaked with death taxes, they would`ve had to go into debt on inflated value!!!  Wait, it get`s worse, in the mid `80s land values crashed back to $700/ acre. Your heirs, within 5 years would be paying off nearly as much in death taxes as the farm is worth!!!! Get it now?

4wd
Senior Contributor

Re: Do away with all taxes

Go to a flat tax and a VAT with ag expenses the only deductions allowed..  That way if bart wants a sports car, fine he can have it if he pays the VAT.

I think the fuel tax is one of the fairest taxes in place. The more you burn, the more tax you pay. How the fuel tax money gained is spent is another thing for another day.

schnurrbart
Veteran Advisor

Re: Wonderful, Schurrbart

There wouldn't be an estate tax on 3 acres first of all.  My farm isn't in the flat black dirt of Central Illinois.  It is in Southern Illinois and I inherited 30 acres and bought out my brother and cousins for their share of the farm for $900/acre.  The tax basis on the land is $700/acre so when I bought, the capital gains tax for my relatives was $200 at 15% and that was figured into their total taxes and I don't believe any of them paid much if any tax on their sale of land.  My Dad "sold" it to us in 1982 before he passed in 1986.  So, I guess you should be "selling" off your land to your heirs before you die.  My farm is now in a life estate with the land already deeded to my daughters.  As long as i and my ex-wife are living, we control the farm then it goes to my daughters.  Of course, it isn't anywhere near the amount nor the value that you BTOs have to deal with.  You seem to be re-enacting the famous fight against the windmill from Don Quixote with your constant griping about inflation.

schnurrbart
Veteran Advisor

Re: Do away with all taxes

It is the same with taxes right now--the more you make the more you pay.  Why should "ag expenses" be the only deduction?  BTW, I have a sports car now.

4wd
Senior Contributor

Re: Ag--gotta eat

Plentiful and cheap food is as critical to this country's survival as a strong military. That is why. Keep it profitable to afford to buy these $250,000 combines to continue to harvest more and more acres effectively, keeping cheap food out there.. The present income tax systam is gamed by the tax lawyers, and CPA'a all around the country, as is the death tax by use of corps set up to avoid paying.. It needs to be scrapped. The fuel tax cannot be gamed. You pay at the pump for every gallon you burn. Retired folks that don't drive, don't pay.  A VAT on autos would be inescapable also. The higher end vehicles are taxed more--period, no escaping it.. You can buy all the sports cars you wish, but, it will cost you in a VAT tax the rest of us  don't pay, unless we try and buy one too.

BA Deere
Senior Contributor

Re: Wonderful, Schurrbart

Schnurrbart, if you`re smart enough to boot up a computer you can understand my post, if you don`t want to understand, that`s something I can`t help you with. When you guys say you should be "selling" and giving away before you die...fine can you tell me the date when we all expire? I`ve known guys in their early 50`s who`ve passed away lately, I guess they didn`t get the memo that their time was up. I`m not a BTO, there`s plenty of farmers that have at least "one more acre" than me Smiley Happy

tomtoolbag
Veteran Advisor

Re: Ag--gotta eat

  That fuel tax is pre-paid too. No collection issues or loopholes to escape it(except for farmers that use fuel that's sold for ag use over the road)and if you don't want to pay it.......no fuel.

  You're right about the estate tax too, because look at how ridiculously low it is for the limits. What's the REAL reason for that??

schnurrbart
Veteran Advisor

Re: Wonderful, Schurrbart

All I'm telling you is what my Dad did and what I have done.  My Dad didn't know when he was going to die and neither do I but we put our "estate plan" in motion so that our survivors don't have to worry about that on top of my passing.  Just about everyone has at least "one more acre" than I do.

tomtoolbag
Veteran Advisor

Re: Wonderful, Schurrbart

  BA, you're actually pretty fortunate to have an asset that neutralizes inflation that you suffer throughout your whole life, as most people don't. But, you don't want to pay taxes on that inflated gain, but I'm sure that you'll spend the money(or somebody will) that the same inflation increased the amount of your asset.

 Are you saying that you want land prices to reflect the low grain prices such as $2.00 corn, because that would work against you too.

  I guess that you never heard the old saying, "when you're paying taxes, you're making money" have you??? You want it both ways, along with never having to pay for anything.