Fox's Henneberg uncritically quoted dubious claims that estate tax would harm family farms and small businesses
SUMMARY: Molly Henneberg uncritically aired quotes that suggested the estate tax would affect "many" small businesses and family farms. But the Tax Policy Center estimated that in 2009, "about 90 percent of the 700 small farm and business estates that will have to file estate tax returns will not owe any estate tax."
In a report on the estate tax during the April 1 edition of Fox News' Special Report, correspondent Molly Henneberg uncritically aired misleading claims about the tax's reach and its impact on small businesses and family farms. During her report, Henneberg stated that "Republicans say this tax does not just hit the rich," and then aired a clip of Sen. John Ensign (R-NV) saying that the estate tax "destroys a lot of small businesses and a lot of family farms and ranches in America," as well as a clip of House Minority Leader John Boehner (R-OH) saying, "Many family farms find themselves in a situation where they've got to sell the family farm in order to pay the [estate] taxes." In addition, Henneberg stated that "if the death tax is resurrected in 2010, economists say small businesses need to plan ahead," and then played a clip of William Beach of the conservative Heritage Foundation claiming that "[b]y and large, the death tax is borne by people who own small businesses." However, an October 2008 report by the Tax Policy Center (TPC) estimated that in 2008, only 15,500 estates -- or 0.6 percent of all that year's decedents -- will owe any estate tax and stated that "relatively few estates [that contain small businesses or family-owned farms] owe any estate tax." Moreover, under the higher estate-tax exemption level in 2009 -- which would be maintained under Obama's proposal -- the TPC estimated that "about 90 percent of the 700 small farm and business estates that will have to file estate tax returns will not owe any estate tax."
The 2008 TPC report estimated that in 2008, only a small number of farms and small businesses are subject to the estate tax and that the vast majority would owe less than $500,000:
A key issue in the policy debate is the effect of the estate tax on estates containing small businesses and family-owned farms. Some critics of the estate tax claim that heirs of such estates must sell the business or farm in order to pay the tax. But relatively few such estates owe any estate tax. If we define those estates as ones in which farm and business assets total less than $5 million and make up at least half of gross estate, only 2,000 will have to file estate tax returns in 2008 and nearly three-quarters (73 percent) of those will have no estate tax liability. About 550 small farm and business estates will owe any estate tax liability and more than three-quarters of those will owe less than $500,000.
The TPC report also estimated that after the 2009 increase in the estate-tax exemption from $2 million to $3.5 million (and $7 million for couples), an even lower number would owe any estate tax:
The scheduled changes in the estate tax will also affect small farms and businesses. We estimate that, in 2009, about 90 percent of the 700 small farm and business estates that will have to file estate tax returns will not owe any estate tax (table 10). Of the nearly 80 such estates that will owe the tax, half will have liability below $1 million.
Moreover, during the segment, both Henneberg and host Bret Baier referred to the estate tax as the "death tax," a term popularized by supporters of the repeal of the tax and which GOP pollster Frank Luntz reportedly found polls better than the terms "estate tax" and "inheritance tax." As Media Matters for America has documented, Fox News has repeatedly used the term "death tax," even though the official name of the tax in the U.S. Code is the "estate tax." By contrast, on the April 2 edition of Special Report, congressional correspondent Carl Cameron stated that "the death tax" is "what critics call" the estate tax.
From the April 1 edition of Fox News' Special Report with Bret Baier:
BAIER: The death tax is being resurrected by the Obama administration. Correspondent Molly Henneberg reports that one of the most despised of all taxes was supposed to be dead and buried, at least for next year.
[begin video clip]
HENNEBERG: If you are planning on dying in 2010 to take advantage of the one-year-only, zero percent federal death tax, you may need to rethink your plan.
There's one line in a footnote on page 121 of President Obama's budget that says, in 2010, the death tax does not go to zero, but, rather, quote, "The estate tax is maintained at its 2009 parameters" -- meaning 45 percent.
So, 45 percent of a dead person's wealth will go to the government for those who have total assets over $3.5 million, or $7 million per couple. Republicans say this tax does not just hit the rich.
ENSIGN: It destroys a lot of small businesses and a lot of family farms and ranches in America.
BOEHNER: Many family farms find themselves in a situation where they've got to sell the family farm in order to pay the taxes. This is inherently un-American.
HENNEBERG: In 2001 and 2003, Republicans helped push through President Bush's tax cuts that lowered the death tax from 55 percent to 45 percent this year, and then to zero percent next year.
Democrats say keeping it at 45 percent in 2010 is still a break from the 55 percent, and they insist the federal coffers would take too much of a hit if Congress completely repealed the tax.
REP. JOHN SPRATT (D-SC): The total repeal would have a substantial additional impact on revenues. And this is also a time when we need to -- we simply can't be profligate about tax cuts.
HENNEBERG: Still, President Obama's own top economic adviser, Larry Summers, has argued in the past that passing wealth from one generation to the next helps the economy. He co-authored a study in 1980 and wrote, quote, "The evidence presented indicates that intergenerational transfers account for the vast majority of aggregate U.S. capital formation."
If the death tax is resurrected in 2010, economists say small businesses need to plan ahead.
BEACH (director of The Heritage Foundation's Center for Data Analysis): By and large, the death tax is borne by people who own small businesses, who haven't had the benefit of, you know, big corporate lawyers and big corporate accounting departments to prepare themselves for paying this tax.
[end video clip]
HENNEBERG: Senator Ensign says he wants a zero percent death tax, but since Republicans are in the minority, they're offering a counterproposal: zero percent death tax if your wealth is under $5 million; over 5 million, it's between 15 and 35 percent. That's the Republican counterproposal -- Bret.
BAIER: OK, Molly. Thank you.
Here's a question for the right wingnutz: Name one family farm that has been sold in order to pay estate taxes within, say, the past 5 years. Heck, make it 2000 to 2008.
Selling because the heirs don't want to farm doesn't count. Must be a sale driven only by the need to pay the estate taxes. Come on - just one...
Oh my friggin gosh ... They are STILL able to push this one? This has GOT to be the most egregious example of the GOP completely making stuff up solely for political gain.
This is totally indefensible. There is not 1 single iota of truth to this. This is an ESTATE tax for LARGE ESTATES over $3,000,000.
I love John Boehner. I could kiss the man. I have a poster of him hanging in my bedroom. He's the BEST Senate Minority (R) Leader EVER! He's the gift that keeps on giving. Every day is Christmas (or your prefferred non-christian holiday) under this great american's watch. (At least for democrats.) LOL
and don't forget Michelle bachmann, along with continue support from Sarah Palin. The Mythbusters guys did a segment on Palin's contention she can see Russia from her house. Turns out she can't. She has to go to an island called Little Diomede before you can spot Russia.I wake up every morning to see what they are saying next.
and don't forget that if you go to the russian side you are a day ahead and if you look towards alaska....your looking back in time! time travel is possible!
and as for michelle "World War I flying ace and her sopwhit camel" bachman. has anyone heard of any furhter reports from "behind enemy lines"?
he's not in the senate......thats mitch mconnell
700 is a significant number that have to file and $500,000 is insignificant only in "government terms."
As for a family farm sale, I have a friend, that even though they did not have to sell the farm, that had to take out a mortgage in order to retain that property. Again $5 Million might seem like a lot, but with a couple of Combines at $250,000 each, a couple of large tractors at the same, ground working equipment, grain hauling equipment, buildings and land, $5 Million can be reached fairly easily in this part of the country.
unless those pieces of equipment are magic, their fair market value decreases with age, not increases, regardless of what was paid for the originally. since the estate is valued using the current FMV of the assets, i seriously doubt those items of farm equipment will significanly contribute to the estate's value. the real property would be the primary contributor to the estate's value.
further, the tax doesn't even start to kick in until the value reaches 3.5 million, and it's only the amount in excess of that which might then be subject to the tax.
there is no recorded instance, ever, of a family business having to be sold, solely to pay the estate taxes on it.
"700 is a significant number that have to file"
Do you really think so? If they're talking across the whole country, it seems remarkably small to me. Plus, 90% of them wouldn't have to pay.
Regardless of the uncritical aspects to the reporting, does anyone else find a 45% tax rate on an estate a bit ridiculous? Not only that, but many many states also have an inheritance tax as well. Would you like to have any of your assets taxed to that degree?
if i recieved an inheritance which i had no contribution towards.....i would have no problem cause its money i wouldn't have had otherwise.
I agree with your statement. It's "found money". If you bitch and moan because you have to pay 45% in taxes for inheritance above $3.5M, you're simply a greedy bastid, plain and simple.
"If you bitch and moan because you have to pay 45% in taxes for inheritance above $3.5M, you're simply a greedy bastid, plain and simple."
So the government's claim on 45% of something they didn't contribute to either is not greedy?
(And my apologies for the same post further down...my bad.)
What are you talking about? You don't think the publicly funded infrastructure; banking, roads, court system, military etc. made no contribution to the profitability of these estates?
This is the "chicken or the egg" argument. Without the taxes the public provides in addition to other sources of revenues there would be no infrastructure. But the government itself doesn't earn money the way you and I do. And "greedy" is very subjective. I just think that government taxing anything at 45% is too much. Treating it as income or capital gains might be a better solution and hopefully would result in a lower tax rate. The entire tax code is too complicated as it is and is usually amended to help special interests. That essentially drives up taxation in other areas - how many "fees" do you see in typical phone bill? Thanks for the reply!
Would you have a problem if the tax rate was 100%? By your own argument, it's money you wouldn't have had otherwise, so why not just give it all to the government? At what point would you consider the tax rate excessive?
Nobody here is arguing for a 100% tax. Meanwhile, you and the right are arguing for ZERO estate taxes. Do not conflate your extreme position (no estate taxes) with our moderate position (some kind of estate taxes). Although I think the rate should be limited to the highest incremental tax rate for that tax year, and there's nothing wrong with the highest rate being 45%. It was 50% during Reagan's first term, and 70% under Nixon.
Randy
Thank you for the reply. I'm not "on the right" and I was not arguing for zero taxes. But I would never consider a 45% tax rate as "moderate". There is also no conflation. Taxes, levies, bonds and fees (not to mention borrowing and printing of money) is what makes the infrastructure possible. The government doesn't earn anything - it takes from the public. I used the 100% argument to point out that everyone has an "upper limit" when it comes to the amount of tax they think is appropriate for any given circumstance. If you don't have money and someone else does, it's easier to justify a higher bracket for them, sometimes in the name of "fairness" or calling them "greedy" or what have you. It's always easier to take and spend someone else's money. I do not have nor am I expecting any inheritance yet I still think a 45% tax on anything is ridiculuous regardless of financial status. You and others obviously think otherwise. Even when the Republicans controlled Congress and the White House they failed to drop the rate lower than 45% - so much for "conservative values". It's ok to disagree and that's why we have forums like this to debate such issues. Thanks again for the reply.
All very good points. And this is one area where I'm sure I'll earn some emnity with my otherwise liberal allies on these threads. Personlly? I would eliminate it. I don't believe in double taxation. Period. I would eliminiate the tax on stock dividends for the same reason. I would also elimiante the AMT, but for different reasons.
That beaing said... I would do it first in a revenue-neutral manner. I would eliminate these taxes, but I would then monkey -around with the brakcets and teh marginal tax rates, sunch that the revenues would be the same, and many of the same people would be paying the taxes anyway... like maybe these rich folkes could pay some of these taxes BEFORE They die. Now that may sound scary-liberal to some, but consider this: At least they (and anyone else who pays the increased tax, because this would have to spread around a bit) would be paying it while they still had a VOTE. Taxing the DEAD (which from their POV is what this is) is taxing someone who no longer votes. Taxation without representation? Tea anyone?
I think you are also missing the point of the tax and don't understand it. This tax is not a double tax nor is it tax on the dead. The money from the estate that is covered by this tax has never been taxed before unless the "estate" has lost value from the original purchase price and is still worth more than $3.5 million.
Even then, there are ways to eliminate any tax burden written into our tax code.
The estate tax is not double taxation. The decedent paid taxes and a completely different person pays the estate tax.
As I posted before, somewhere else:
Here's the deal: you inherit property at what it's worth when the decedent passed, not what they paid for it. So if Dad's stock portfolio is worth, say, $100,000,000 when he died, that's what it's worth to YOU for tax purposes, meaning if you sold every share for $100,000,000, you'd pay ZERO taxes. And guess what? Dad didn't pay any taxes on it either. He bought and HELD it. Now consider that Dad's basis (what he paid) was only $10,000,000. That means without estate taxes, $90,000,000 would NEVER GET TAXED.
That's the whole purpose of the estate tax: to recoup some of the taxes lost through inheritance, and only on estates past a certain amount. Presently, that amount is $3,500,000 in 2009, thus affecting a small percentage of decedents' estates, and unless Congress changes things, in 2010, the estate tax will be ZERO, but resumes pre-Bush rates and brackets in 2011 (the sunset law).
Randy
As soon as all income is taxed at the same rate (capital gains, etc) then I would agree.
But also, not to be a wise guy, but how often does someone want to actually keep and maintain this type of property, putting them in that position? Most times, if not all times, it is being sold anyway.
I have no idea how often this situation happens, but (and I would not kid you here) I have a firsthand experience of this very exact thing, involving a farm no less, in the past year.
It's why I knew of the situation well enough, that I was able to describe it to you.
It wasn't me and my farm, but that of another who is a friend of mine. The details are of a family farm, where the father (who was the original property owner) died several years ago. At that time, the Estate was structured so that his surviving wife would be the sole beneficiary, which involves no Estate tax. But when she died last year, then the farm fell to the son (the friend of mine), and it then became a great and difficult problem, of how to find the cash to pay the Estate tax, without selling the farm. And the good news is, that the farm wasn't sold to pay the Tax, although it was necessary to borrow in order to satisfy the IRS (and borrowing is the neccessary evil of farming, and it's usually why farmers look and talk so serious: drought will make them downright gleeful, compared to the disasterously risky incurring of more debt).
Anyway, it happens, believe me.
And the solution to the problem is to make Real Estate and other non-cash property that is inherited as an Estate, taxed like Capital Gains, to be paid when they are realized or otherwise sold and liquidated and turned into cash.
If my description of the problem does not illuminate it well enough, then I guess you'd have to have it happen to you, in order to appreciate it... but I wouldn't wish that on you, especially if you were a farmer.
Lastly, do not think for a moment that I am sympathetic or in agreement with these media hacks and the self-serving selfish wealthy class they serve, and their nonsense about the "death tax": they wish not to pay an Estate Tax, or any Tax at all... and it truth it makes me sick that they would invoke farmers and farms in this their scheme...
Farmers don't mind paying their fair share (unlike that selfish class and the media hacks they employ): it's just that when the Estate is not cash, and especially when it's a farm, it might be a real problem finding the cash to satisfy the IRS...
Especially for farmers, who already get screwed by just about everyone and everything in America (except their own families and friends), and screwed by the weather too: because for farmers to find cash on their books, is about as easy as finding it in the dirt, or having it fall out of the sky.
demo thank you very much for you insight, i had no previous knowledge or experience myself and undertand it a bit better.
and i believe it fits in nicely with my own assumptions.
namely that if i recieved an inheritance of money that i had not contributed myself....i feel it should be taxed. if it was some property it would seem to me that it may not be especilly if its not being used.
I hear what you are saying Demo, but in a case like that, if the farm is worth that much more than $3.5 million, then the business should have been set up differently and the farm should have been incorporated.
When estates are businesses/farms and they are worth more than $3,5 million, people have to think ahead and plan for their demise and the tax consequences.
The truly wealthy, the people this tax was really set up for, know the ways around it or can easily afford it.
So, I feel bad that your friend got screwed by this particular tax, but the overwhelming majority do not. I know on a personal level (for your friend) it's not a good situation, but I think in general it's a fair way to capture income.
Also missing from all this is that the Republican's had their chance to eliminate the estate tax permanently back with the original Bush Tax Cuts. They chose to do this either out of political cowardince, or (more likely) political expediency, since they could not only pass the cuts fatser, but also artificially ensure that there would be a tax debate every 8-10 years or so, and they could KEEP ON saying that they are they party of lower taxes. The really need to be called out on this BS.
see i think the estate tax could go either way on this.
here are two examples of where i think its both good and bad.
the good: an estate where the person who inherits and has not contributed to wealth accumulation is where the tax would be good.
the bad: (and this was a decent point brought up with someone i was debating this very issue with). say a father and son have a business and have worked together for years and the son inherits everything....well here is where it could be bad. since the son has contributed and has probably paid taxes the same as his father. then it could be bad and be seen as doubble dipping.
and for good measure here is the Ugly. (big fan of sergio leone): the thing is i think the vast majority of cases where an estate would be taxed is the one where it is just inherited and the heir has not contributed. problem is those who oppose this tax makes it out that it shouldn't be in at all because of maybe a very small minority that they paint to be a majority of cases.
if there is any information that proves either side please share.
Well if you apply estate taxes to principles it loses everytime since you are forcibly stealing peoples property, no matter how much it is.
theivery - not a good principle
you make it sound as if the entire estate would be taken away and thats not the case. and thats not what im getting at.
Well, if the guy wants to go out and buy a yacht with the money, tax the crap out of the purchase. If the yacht is purchased in a manner to avoid the tax, throw him in jail.
ok your going to the far extreme and taking me out of context further. i would think the money would be taxed.....then given to the person to do with as they will.
No extreme. People should be able to keep what belongs to them until they voluntarily decide to dispose of it. Pretty simple.
If the son already owned a share of the business I expect estate taxes would only apply to the share of the business he inherited from his father. It probably depends on how the business is structured too. Limited partnerships and corporations passing to partners may have some different rules. I'm not an accountant (abviously) so I don't know.
but thats what im getting at though......it doesn't make sense to me that money that a person recieved not having contributed a single penny to should not be taxed just because it was given to them via inheritence.
OK. Well I guess we agree.
and as for fixed news using a DUBIOUS claim, one not completly supported by facts and more just a neo con talking point? well what did you expect.......
Fox does not deal in facts any more so than the republicans do.
Agreed. But the same goes for the media in general as well as the Democrats. They are not paragons of virtue telling us the truth, the whole truth and nothing but the truth. They will all do whatever it takes to make their side look good. It's up to us to get all the facts and not blindly accept what one side says the facts are. In my opinion the media and political parties think we're all just sheep to be led wherever they want us to go. I say "enough" of that crap...
I'm not a legal expert; but I believe that if a person establishs a trust, that their estate is not taxed, whether it is $5 million or $50 billion. Please correct me if I am wrong. Thank you.
In essence, this issue is a smoke screen or red herring to energize uneducated folks who would never be concerned.
"If you bitch and moan because you have to pay 45% in taxes for inheritance above $3.5M, you're simply a greedy bastid, plain and simple."
So the government's claim on 45% of something they didn't contribute to either is not greedy?