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Estate tax repeal for the wealthy

By Dave Carter
President
Rocky Mountain Farmers Union

I never knew that family farmers and ranchers had so many friends.

Just look around. It seems as if every major big business organization is engaged in some type of public hand wringing about the future of the family farm and ranch. Conservative think tanks, chambers of commerce…everywhere you turn these days someone is bemoaning the imminent threat to the future of the American family farm and ranch.

Mind you, many of these groups historically opposed efforts to increase the profitability of farmers and ranchers through the preservation of a competitive marketplace, through fair trade policies, or through an equitable federal farm policy. But they are sure demanding that family farmers and ranchers be protected through an immediate repeal of the estate tax, which they have managed to get dubbed as the “death tax.”

It all makes me a little nervous.

To be sure, some significant reform of the estate tax system is long overdue.

Even though fewer than two percent of U.S. farms and ranches are ever subject to estate taxes, the current system poses a hardship to some family producers who want to make sure that they can pass along a viable operation to their heirs.

An amendment offered by U.S. Sen. Kent Conrad, D-ND, during the recent tax cut debate, would effectively address the deficiencies in the current estate tax system. The Conrad amendment would increase the effective estate tax exemption to $4 million per individual, or $8 million per couple, over the next ten years. In addition, the amendment would exclude, by 2003, qualified family farms and businesses from estate taxes as long as those enterprises are transferred to one or more heirs who continue to operate the business. The proposal would also lower the effective rate for all remaining estate taxes.

It is a major change. But for some special interests, that was not enough. Those interests were not satisfied with anything less than an outright repeal of the estate tax. At that point, their arguments about wanting to preserve family farms and small businesses began to crumble.

The major advocates of estate tax repeals are hardly concerned about preserving Mom and Pop businesses. They want to protect wealth that is already accumulating in fewer hands at an alarming rate.

Earlier generations of leaders understood that unrestrained concentration of resources represented a real threat to American free enterprise, and to American democracy. Just as Thomas Jefferson advocated public education as a means to create opportunity through equal access to knowledge, political leaders earlier this century recognized that certain safeguards were necessary to protect access to economic advancement.

President Woodrow Wilson fought to halt the concentration of resources in the United States. He proposed the creation of the Federal Trade Commission, and he introduced the graduated income tax system. Under his Presidency, the modern estate tax system was born in 1916 with the idea of curbing vast accumulated wealth. The top rates were later increased under the Presidency of Franklin Roosevelt.

During each of these periods, Presidents argued vigorously that working Americans deserved protection from undue accumulation of financial wealth among the “idle rich.” They understood that true social wealth depends upon widespread health, education, prosperity and quality of life.

That attitude has ebbed among many of today’s political leaders.

One hot-selling book, “Rich Dad, Poor Dad: What The Rich Teach Their Kids About Money That The Poor And Middle Class Do Not,” contains a chapter entitled “The Rich Don’t Work for Money.” In that book, the authors note that the rich “make money,” rather than “earn money.”

“I don’t work for money,” the author proclaims. “Money works for me.”

The creation of new wealth fueled the American economic engine through most of this nation’s first two centuries. Our culture is deeply rooted in the concept of reaping the rewards of hard work and ingenuity. In short, we encouraged people to work hard for their money. Unfortunately, the bill now headed to the President’s desk lavishes the benefits on the segment of Americans already privileged to let their money work for them.