Some Democrats Continue to Push Super Committee to Hike Death Tax...

by Adam Nicholson - No Comments
Posted on September 14th, 2011 4:41 pm

Bad ideas die hard.

Michael Tanner, a scholar at the Cato Institute, writes at National Review Online that some "Democrats are pushing for tax hikes. A leaked memo from supercommittee documents includes proposals for a 5.4 percent surtax on families earning $1 million or more, an increase in the estate tax."

As AFBI shared earlier this week, the political and economic facts show why this is a no-win proposal. Unfortunately, cold, hard facts are not convincing to some Members of Congress.

Comic strip courtesy of Non Sequitur

Tags: death tax, estate tax, legislation, super committee

Mitt Romney's Economic Plan Kills the Death Tax

Death Tax Repeal Pledge Signer Says Tax has Catastrophic Effects on Family Businesses
by Adam Nicholson - No Comments
Posted on September 13th, 2011 11:45 am

Mitt Romney, one of the nine Presidential candidates to sign the Death Tax Repeal Pledge, has made death tax repeal a component of his comprehensive economic growth plan.

Romney understands that the tax has "catastrophic" effects on family businesses, according to an ABC News description of his plan. Romney is absolutely correct, as family business owners and farmers such as Jeff Page, Pearl Marr, Clayton Leverett, Eugene Sukup, and many more can readily attest.

When family business owners face the death tax, their employees are the first ones to feel the cut. ABC News cites a 2003 Heritage Foundation study, finding that repealing the estate tax would create 170,000 to 250,000 jobs. A more recent study by former Congressional Budget Office Director Douglas Holtz-Eakin found that the number of jobs created by estate tax repeal could come closer to one million.

AFBI applauds Mitt Romney for recognizing that the estate tax imposes a heavy cost on the economy and working for repeal.

Tags: 2012 presidential election, death tax, death tax repeal pledge, estate tax, family business, farm, job creation

Tilting at Windmills? Some Democrats Consider Estate Tax in Super Committee

Majority of Panel Remains Opposd
by Adam Nicholson - No Comments
Posted on September 12th, 2011 12:15 pm

Don Quixote, meet your match.

Reuters reports that some Democrats on the House Ways and Means committee are living in fantasy land. They are proposing that the Select Joint Committee on Deficit Reduction (i.e., "Super Committee") hike the estate tax as a revenue measure. Of course, this flies in the face of economic reality. Hiking the estate tax will not increase revenue, but will decrease total federal revenues while increasing the deficit.

Even if these Members of Congress can't see the economic reality, they should see the political reality. As AFBI's blog reported earlier, the majority of the committee opposes hiking the estate tax. The committee's staff director was a major force behind the 2001 temporary estate tax repeal law.

And a majority of the House of Representatives, including the 170 bipartisan Members who have cosponsored the Death tax Repeal Permanency Act (HR 1259), support permanent repeal. Hiking the estate tax is not a winning proposition.

Don Quixote came to his senses after a rather humbling ordeal. Hopefully the Ways and Means Democrats will come to their senses faster than the man of la mancha.

Tags: death tax, estate tax, legislation, super committee

Buffett Wants Higher Taxes - Just not on Him

Article claims Billionaire Investor owes over $1 Billion in Back Taxes
by Adam Nicholson - No Comments
Posted on September 6th, 2011 4:50 pm

Billionaire Warren Buffett has a reputation for asking the government to take more of his money. Now it appears that he has changed his mind.

An article in Newsmax reports that Warren Buffett owes some $1 billion in back taxes:

it turns out that Buffett’s own company, Berkshire Hathaway, has had every opportunity to pay more taxes over the last decade. Instead, it’s been mired in a protracted legal battle with the Internal Revenue Service over a bill that one analyst estimates may total $1 billion.

Yes, that’s right: while Warren Buffett complains that the rich aren’t paying their fair share his own company has been fighting tooth and nail to avoid paying a larger share.

While the hypocrisy is clear, it should not be surprising to long-time observers of the Sage of Omaha. Warren Buffett likes to talk tough about higher taxes, but not because he actually intends to pay them himself. In fact, Buffett has become something of an expert at profiting from the estate tax.

As AFBI has previously reported on this blog and elsewhere, Warren Buffett actually profits from the estate tax. Dick Patten explained in a Human Events article:

The “Oracle of Omaha’s” wealth has come from making wise investments in three different business activities. First, he’s made substantial investments in major corporations that he believes will appreciate; second, he operates a huge casualty and life insurance business which provides massive reserves of cheap capital to support his other two investing activities; and third, he purchases family owned businesses at fire sale prices. The last two practices are directly dependent on the death tax, and it’s unlikely that Mr. Buffett would be the world’s second richest man without it.

Warren Buffett may be a savvy investor, but he is certainly a cynical policy advocate.

Just last week, Washington Examiner columnist Tim Carney reported that Buffett bet $3 billion on a bailout for the struggling Bank of America. In that same article, Carney explains how Buffett managed to make a tidy sum with his investment in General Electric, thanks to bailouts that kept the company afloat in 2008.

The Oracle of Omaha knows exactly what he is doing when he lobbies Congress. It isn't self-sacrifice.

Tags: estate tax, lobbying, warren buffett

Super Committee Staff Director Guided Estate Tax Repeal Bill in 2001

New Hire Indicates that Committee Recognizes Raising Estate Tax is Bad Policy
by Adam Nicholson - No Comments
Posted on August 31st, 2011 2:46 pm

The Super Committee (aka, the Select Joint Committee on Deficit Reduction) made a super hire with the selection of Mark Prater to serve as staff director, according to the Seattle Times.

Prater currently serves as the deputy staff director and chief tax counsel for the powerful Senate Finance Committee.

Prater's accomplishments during his two decades at the committee include pushing the 2001 estate tax repeal legislation through the committee. The Seattle Times reports that he "helped steer President George W. Bush's landmark tax-cut package through that committee in 2001 -- across-the-board rollbacks in income- and estate-tax rates."

Prater's selection by the Super Committee's bi-partisan co-chairs - Senator Patty Murray (D-WA) and Representative Jeb Hensarling (R-TX-5) - indicates that the committee understands that raising the death tax burden is the wrong way to solve the deficit crisis.

Tags: capitol hill, death tax, estate tax, legislation, revenue, super committee

Israeli Estate Tax Would Drive Away Wealthy Immigrants and Investment

by Adam Nicholson - No Comments
Posted on August 26th, 2011 5:48 pm

Should Israel impose an estate tax to capture additional tax revenue? Not if the tiny Jewish nation wants to keep attracting immigrants and capital, according to an article published today by two Israeli lawyers. Alon Kaplan and Shaun Isaacson explain why an estate tax is likely to reduce overall investment and immigration:

"The bill’s sponsors are only trying to tax the wealthy but they are ignoring the consequences such a law would have on foreign residents, immigrants and returning residents who have come to Israel from all over the world. These people have taken tax advice they sought prior to moving their lives and livelihoods to Israel."

The authors go on to explain that Israel currently offers a number of tax incentives that have been instrumental in driving wealth into the country. However, an estate tax would likely undo those benefits. Worse yet, they would fall hardest on the middle class:

We wish to let [the chief proponent of the estate tax] on into a little secret: the deep pockets of those wealthy people that she wants to get into, enable them to find and pay for sophisticated tax planning structures that are completely legal. When wealthy people establish trusts, foundations and other legal structures that save their heirs from paying estate tax, the citizens left carrying the can are those middle class Israelis who bought apartments with their hard-earned savings but did not have the means to employ sophisticated tax planners.

Researchers have found that in the U.S., superwealthy men like Warren Buffett and Bill Gates, Sr. are able to avoid, if not benefit, from the estate tax, while small business owners and their workers suffer.

If this wasn't argument enough to dissuade the Knesset from imposing an estate tax, the authors point out that the tax lacks moral justification:

Is there a moral justification to tax the estates of citizens who have worked hard, achieved success and have already paid all the relevant taxes in respect of the assets they’ve accumulated? Should they be taxed for their success and their desire to provide for their children with the fruits of their labour?

Several years ago a study found that the U.S. has one of the highest estate taxes in the world, while Israel is among the 24 nations that imposed no estate tax. Does Israel really want to leave the "no death tax" club?

Tags: capital flight, death tax, estate tax, international death tax, israel

Family Business of the Week: Dennis Paper and Food Service, a Third Generation Enterprise

by Dick Patten - No Comments
Posted on August 26th, 2011 12:00 pm

This little yellow bottle of mustard has been around since 1900, about as long as the family business began by Ron Dennis’ Russian-immigrant grandfather in1908, which distributes Raye’s Mustard today.

Ron tells the story this way:

“My grandfather — a Russian immigrant — and his four brothers got the entrepreneurial bug back in 1908. They decided to go into the soft drink bottling and distribution business. Then known as Washington County Bottling Works, my grandfather bottled soda and delivered it via horse-drawn wagon to customers. The company even created a few soda drinks of its own, such as the 13 ‘University Club’ flavors. Over time, they became involved in the growing paper business and then, with the advent of mass refrigeration, the food-service distribution business.”

The company’s got a new name these days: Dennis Paper and Food Service. But the same care and attention that began three generations ago is carried on today. The Dennis family continues to grow the business, creating jobs for many local workers in Bangor, Maine. In fact, Dennis explains that today, the company is the “fastest growing distributor in Maine.”

Dennis attributes the company’s success to his grandfather’s values of “hard work, thrift, creativity and diligent reinvestment. Those are the values that I live by, and they are the values that I intend to pass down to my children. I hope to pass the company to them as well.”

But standing in his way is one thing: the death tax. A fact that competitors and potential buyers know all too well and would be more than happy to take advantage of:

“I have already received multiple offers from out-of-state corporations that want to buy my business. These corporations know that my children will face a large death tax and are encouraging me to save them the trouble by liquidating the business.”

Dennis knows that selling the business could cost his employees their jobs.

It would also come at the cost of his family’s third-generation dream.

“I love this company and have no plans to sell it — assuming I can find a better way to pay the tax.”

Click here to read more about Ron Dennis and his family’s piece of the American Dream.

Then ask your Representative to support permanent estate tax repeal.

And by the way, if you haven’t tried Raye’s Mustard, you should. It was declared the world’s best classic yellow mustard when it won the 2006 Napa Valley World-Wide Mustard Competition’s gold medal.

Tags: death tax, estate tax, family business owner of the week

Rick Perry: Tea Party Indignant Because of Death Tax

Presidential Candidate says Estate Tax is Indicative of Frustration with Congress
by Adam Nicholson - No Comments
Posted on August 15th, 2011 12:10 pm

Governor Rick Perry, a signer of the Death Tax Repeal Pledge, told a Waterloo, Iowa crowd that the Federal Estate Tax explains why the Tea Party is unhappy with Congress:

"Tea party types aren't angry,” he said. “We're indignant about big government hurting companies. We're indignant about [the fact that] Washington would take half of what you have worked for in what we call the death tax."

A majority of the Republican Presidential candidates have signed the pledge. Click here to see the full list.

Tags: 2012 presidential race, death tax repeal pledge, estate tax

Great Article in Reuters about American Family Business Institute and the Estate Tax Debate

by Adam Nicholson - No Comments
Posted on August 8th, 2011 10:32 am

Reuters columnist Nanette Byrnes published an excellent article today describing AFBI's role in the death tax fight:

"It has been a good year for Dick Patten, the leading opponent of estate taxes in the United States. A bill to end federal estate tax is taking shape on Capitol Hill. Victories in the states are adding momentum to the fight he leads through his Washington-based lobbying group, the American Family Business Institute.

Buoyed by an anti-tax mood that helped turn governors' mansions and statehouses Republican in 2010 and that fueled the debt-ceiling debate in Congress, states are taking action despite weak economies that would seem to make revenue sources sacrosanct. Ohio axed its estate tax. Maine doubled the size that an estate must be before it can be taxed. Oregon and North Carolina fought off plans to increase estate taxes."

Nanette explains AFBI's role in both the state estate and inheritance tax battles and the fight for repeal in Washington, DC.

Click here to read the full article.

Tags: about afbi, death tax, estate tax, news

Will a “Super Panel” Hike the Death Tax – and Increase the Deficit?

Tell Congress that the Death Tax is not a Solution for Fixing the Budget Deficit!
by Dick Patten - No Comments
Posted on August 8th, 2011 10:18 am

The immediate future of the death tax appears to be in the hands of 12 soon-to-be-chosen D.C. lawmakers – six Democrats and six Republicans, divided equally among the Senate and House.

This so-called “Super Panel,” created by the recently-inked debt ceiling compromise, will be tasked with recommending a plan that provides over a trillion dollars in deficit reduction. As you can imagine, pressure is already mounting for the panel to recommend upping the death tax on America’s family businesses and farms (see blog post).

In fact, one way the panel may increase the death tax burden is through stripping away the few tools available for protecting family businesses and farms. Minority discounts, grantor retained annuity trusts (GRATs), and sale transactions are a few of the means by which family business owners and farmers can keep the business or farm intact when the death tax hits.

Stripping away these tools will do severe damage to family businesses and the jobs they create.

The facts show that a better way to increase tax revenues is to repeal the death tax.

As Congress returns home for the August recess, please make sure your Senators and Representative hear this message: A heavier death tax on America’s family business owners, farmers and entrepreneurs isn’t the solution to Washington’s out-of-control spending.

Nearly 170 Representatives have now cosponsored HR 1259, the bipartisan Death Tax Repeal Permanency Act.

Is your Representative among the cosponsors? Visit our HR 1259 tracking page to find out!

Please ask your Representative to cosponsor HR 1259 and reject any “Super Panel” proposal to increase the death tax burden.

Tags: death tax, debt ceiling compromise, deficit reduction, estate tax, legislation, super panel

Family Business of the Week (video!): A Napa Valley Vineyard

by Dick Patten - No Comments
Posted on August 4th, 2011 1:15 pm

If you enjoy a quality Napa Valley syrah or cabernet, then you’ll appreciate the story of AFBI friend and vineyard owner Jeff Page.

Napa Valley offered fertile soil to Jeff’s great-grandfather when he started the family farm in the 1880s. The next two generations of Pages cultivated the land and gradually added orchards and livestock holdings of Hereford cattle, sheep, turkeys. The family anticipated leaving the land in the care of succeeding generations…

...until the death tax destroyed their dream.

It’s a story Jeff’s shared with the Napa Valley Register and at a Capitol Hill briefing on repealing the estate tax.

As Jeff tells it, when his grandfather died, the IRS assessed a death tax on the family’s land, livestock, produce, tractors and combines, feed troughs and barns, and everything personal they owned.

The total bill wiped them out. The family was forced to sell off the majority of the farm - even leasing out their home ranch to raise enough cash.

Today, Jeff and his family are carrying on the family tradition on a new (smaller) farm. He is doing everything he can to make sure that the death tax does not take it away – yet again. This includes paying “protection” to his lawyers and estate planners to try to keep the IRS’s wolves at bay.

The Page family, like so many fellow farmers, ranchers and salt-of-the-earth Americans, has had enough of the IRS’s sour grapes. It’s time for Congress to repeal this tax once and for all.

Tags: death tax, death tax horror story, estate tax, family business of the week, family farm, family ranch

Tax Hikes in Super Committee? Don't Blink

All Taxes - Including Estate Tax - are subject to Increase when Super Committee Meets
by Adam Nicholson - No Comments
Posted on August 3rd, 2011 11:33 am

<p>When the "Super Committee" Congress created to find at least $1.2 trillion in additional deficit reduction meets, all taxes will be on the table, according to <a href="http://www.politico.com/news/stories/0811/60548.html ">an article in <em>Politico</em></a>. As <a href="http://www.nodeathtax.org/death-tax-and-the-debt-ceiling-">we noted yesterday</a>, the death tax was not touched by the debt ceiling deal, but it is open to change when the Super Committee meets.<br /><br />Again, AFBI recommends that Congress take advantage of the opportunity to <a href="http://www.nodeathtax.org/uploads/view/2502/a_score_of_the_death_tax_repeal_permanency_act.pdf">increase revenues</a> by repealing the estate tax.<br /><br /></p>

Tags: death tax, debt ceiling, estate tax, legislation, super committee, tax revenues

Death Tax and the Debt Ceiling

No Change in Death Tax Law, Research Shows Need for Repeal
by Adam Nicholson - No Comments
Posted on August 2nd, 2011 11:34 am

Last night the House passed the Budget Control Act of 2011 (S. 365). In less than an hour the Senate will vote on this legislation. It is expected to pass and the President will sign before midnight tonight.

S. 365 raises the debt ceiling by $2.4 trillion, requires $900 billion in initial spending cuts, and establishes a congressional commission (a "Super Committee") to find additional deficit reduction of at least $1.2 trillion.

The act includes no tax increases.

However, the legislation does implicate the death tax in two ways.

First the budget baseline for the legislation assumes the continuation of current law. That is to say, the calculation used to determine federal revenues is based on a 35% death tax with a $5 million exemption through 2013, which jumps to 55% and a $1 million exemption on January 1, 2013.

Second, the "Super Committee" is authorized to make either spending cuts or tax increases to find at least $1.2 trillion in deficit reduction. A change in estate tax law is a theoretical possibility.

Fortunately, over 160 Members of Congress recognize that the Federal Estate Tax is a bad policy - both for small business owners and for the wider economy.

And the research shows that one of the best ways to reduce the deficit is to repeal the estate tax. In fact, repeal would increase net federal revenues by $89 billion over 10 years, according to a revenue estimate of the Death Tax Repeal Permanency Act.

Tags: budget control act of 2011, death tax, debt ceiling, estate tax, s 365, tax revenue