On the December 9 edition of his radio show, Rush Limbaugh peddled the usual right-wing scaremongering about the estate tax, claiming that if the owners of a farm “that has been handed down through three generations, and the land alone is assessed at $5 million, but you don't have anything close to that kind of money to pay a new estate tax, then you have to sell the family farm,” adding that there are “many farms” that would be “taken down.”
In fact, as we detailed, that's misleading -- only a handful of farms are worth that much, and farms can claim an additional $300,000 tax exemption on top of the $5 million exemption proposed under President Obama's compromise plan. Further, as the U.S. Department of Agriculture notes, federal law provides that if at least 35 percent of an estate's value is a farm or closely-held business, estate taxes may be paid over 14 years and 9 months, with interest due only for the first 5 years. The USDA highlighted other provisions favorable to family farm estates.
Limbaugh made another related claim: “The children of Joe Robbie had to sell the Miami Dolphins and the stadium to pay federal income tax, the death tax.” Turns out that's misleading, too.
As the Committee for Tax Justice notes, when Robbie died in 1990, he had singled out three of his nine children to act as his trustees and manage the Dolphins. That did not go over well with his other children, and legal action ensued. The San Jose Mercury News summarized the Robbie case in a February 21, 1998, article [retrieved from Nexis]:
The fight didn't heat up until after the death in 1990 of owner Joe Robbie, who needed bank loans to finance a new stadium but found his cash flow withered after it was built. Robbie died after agreeing to sell 50 percent of Joe Robbie Stadium and 15 percent of the Dolphins to [Wayne] Huizenga, but his son, Tim Robbie, proceeded with the deal.
Some family members, however, didn't want Huizenga as a limited partner and believed Tim Robbie had sold them out. What they did not realize was that the team's future was in jeopardy without Huizenga's money.
The ensuing rift broke apart the family. On one side were three of Joe Robbie's children, Tim, Danny and Janet. On the other was everyone else, including their mother, Elizabeth, who had a legal right, under Florida law, to claim 30 percent of her husband's estate. That claim, plus estate taxes of about $43 million, forced the Robbies to sell the remainder of their interest in the team and the stadium to Huizenga.
In the end, each of Joe Robbie's children was left with about $ 6 million after taxes.
“As much as Mr. Robbie produced for his children, I'm sure he's turning in his grave,” Dade County Circuit Court Judge Ronald Friedman told the family. “I'm sure this is the last thing Mr. Robbie wanted to see.”
While estate taxes were a factor, it was far from the only one. Feuding heirs in a highly leveraged operation with cash flow issues, plus inadequate planning that allowed the feuding-heirs situation to occur in the first place, exacerbated the issue.
Blaming the Robbie situation only on estate taxes, as Limbaugh does, is a highly selective reading of the facts.