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sdholloway56
Senior Advisor

great new gig

might be even better than when the guys would dress up in their seed caps and bibs and go testify before Congress about how the Death Tax would destroy "family farms." Hard telling what that paid.

Now we got farmers in LA testifying that solar developments on land they farm will "destroy their way of life." Hope the oil and gas folks are paying well.

Actually, I can sympathize, as I would anytime somebody loses a rented farm. But I'm not sure how Farm Bureau is going to reconcile it with the bedrock "property rights" 11th Commandment. As far as I know an owner can rent to anybody they'd like and can even let it grow up in weeds if that's their thing (subject to state and local weed ordinances- a heinous regulatory overstep of big government).

BTW, in the scheme of things far better than when a developer destroys a section and the previous owner buys 4 with a 1031. There's very little disruption of the land in a solar field.

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19 Replies
BA Deere
Honored Advisor

Re: great new gig

It`s my observation that everyone would secretly like to have the annual revenue $$$ from windmills & solar panels.  But when they get passed by and their neighbor signs the lucrative contracts, it`s then the windmill with a line through it signs come up and complaints of "health concerns" come out.   The death taxes are double taxation no matter how else you spin it.  Look i`m jealous of the guy that owns 5,000 acres of $18,000 land too and his only child will get it all.  I hate those people  Smiley Happy  but that doesn`t give me right to steal their ill gotten gains.

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sdholloway56
Senior Advisor

Re: great new gig

Largely not double taxation (most wealth of that magnitude is not retained earnings), but the Don Kraft Plan is the gold standard.

Tax capital gains at the same rate as OI.

Index the cost basis to CPI- thus, if somebody gets lucky and hits a big one in a year they pay the same taxes as earned income- good for them but there's no benefit to encouraging that. If somebody holds an asset for the long term, they shouldn't be taxed on the inflated portion.

After a 100% spousal deduction, at the death of the second spouse all untaxed assets are treated as if sold, under that standard.

As far as "family farms" goes, I'd say something like the value of a nice section or a nice CA home should be exempt. No point in messing with returns on the vast majority of estates anyway.

BTW, I'd imagine that Jeff Bezos' cost basis on each of his Amazon shares is well under a penny. Indexing isn't going to help him much.

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sdholloway56
Senior Advisor

Re: great new gig

Either way, don't be like Kristi Noem's Dad and die without a valid will.

The laws of intestacy in your state can really screw things up. If the estate had merely passed to his wife there would have been no tax and then they could have gotten to work on what next.

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sdholloway56
Senior Advisor

Re: great new gig

BTW, I think the same regime of taxation should apply for any American who wishes to renounce their citizenship and expatriate.

Settle up, don't let the door hit you in the *** and don't come back.

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sdholloway56
Senior Advisor

Re: great new gig

In a game where about 2/3rds of the outcome is based on where you started, it is hard for me to understand why anybody with actual aspirations for the family continuing farming would oppose some curbs on inheritances.

Well, any but the very most favored.

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sdholloway56
Senior Advisor

Re: great new gig

For closely held family businesses up to a particular size you could probably expand the exemption if the heirs are willing to agree to locking the old basis in forever.

It’s the “family farm” or business, right? Who’s sellin’?

Thats why it was so pathetic when they trotted Farm Bureau out to the fore right away regarding stepped up basis.

Farms are pretty easy to put a valuation on. Public companies super easy- it is what the market said it was on the day of death. Private businesses are a lot trickier.

Heirs would have a fully stepped up basis under the Kraft Plan.

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timetippingpt
Honored Advisor

Re: great new gig

Not to restate the obvious, but obviously Bezo's, or the trust he puts his stock in, will never be taxed. Just like the Clinton Foundation, or the Kennedy Clan's, or the Bush Clan's, or to make SD happy, yes the Koch Clan. Senator Lugar once told me when I was discussing tax policy with him, that "if you are paying too much tax, get a better lawyer and accountant". That won't change regardless of what Kamala wants to do, she was put there by big money, who doesn't pay much tax, they paid nicely to be left alone :-)

So SD, index it for inflation, starting with the value of the dollar in what year 1968? I'd be ok with that I guess, dollar is down 90% since then. Certainly we cannot use the CPI inflator as it under-reports actual inflation by about 300% most years. (3% now vs an actual of 10 to 12).

I'd sternly disagree with you that the tax is on un-taxed earnings. Every bit of equipment we own was paid for with a AFTER tax dollar, every one. (Principal payments have to be made out of after tax income). But, even in your post, you want to start granting exemptions, you in your all knowing power decide how big a fair exemption is "a section". Why not 4 sections, why just one, you can't live on one section that is for sure.

Regardless of the law, we will have to adjust and adapt, just like all the other tax laws. Or, maybe we will have to do what our friends in Argentina do, take 15% of the profits each year and transfer to gold held in a swiss bank account. :-) Bezo's and his ilk have multiple private jets, you can move around a lot of things in a hurry if you go through the "private customs" offices that handle the private jets, just my experience.

sdholloway56
Senior Advisor

Re: great new gig

And you're saying what?

Anyway, what about indexing the cost basis or treating untaxed appreciated assets as a sale upon the death of the second spouse don't you like? It does eliminate any concerns about double taxation and attempts to address the inflation tax.

Although alternatively, you could simply eliminate the step up. 

But you can't have it both ways.

BTW, one of the most important efforts now (possibly) in progress is funding the IRS enough to go after the estimated several hundred $B in taxes evaded by the wealthy and corporations each year. Who doesn't like a 100X ROI? Although it will be like in 2017 when all the Republican Senators and Representatives were putting their requisite 4 hours Dialing For Dollars over across the street at the call center. They all said that their best donors virtually all told them- pass the tax cut or never call me again. 

A tax cut that actually led to a drop in fixed business investment, manufacturing employment and an increase in the trade deficit. And the economy still could sustain growth over 3%.

 

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sdholloway56
Senior Advisor

Re: great new gig

My bad- I thought I typed quarter section.

The Homestead Act. If there's some deep cultural attachment to the family farm, that should cover it.

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