Sen. Thune: "It is time to put a nail in the coffin of the death tax."

Senator Thune is continuing his fight to end the death tax.

As tax day approaches, I am reminded of a quote by Benjamin Franklin: ?In this world nothing can be said to be certain, except death and taxes.?

At a time when our current president has chosen to talk about redistribution of wealth, raising taxes and introducing outrageous levels of federal spending Senator Thune’s proposal is a very intelligent move. And Thune is right when he states: “The federal government has no place forcing grieving families to pay a tax on their loved one?s life savings or estate that have been built from income already taxed when it was initially earned. The death tax is an unnecessary, burdensome, and sometimes devastating double tax.”

HEAR, HEAR! Removing the death tax provides a great opportunity for small business owners and their families to protect the assets they built over their lifetime. This makes it possible for their children to continue creating jobs and increasing business productivity.

Former Congressional Budget Office director Douglas Holtz-Eakin backs up Senator Thune’s proposal.

repealing the federal estate tax would create more than 1.5 million small-business jobs, reducing unemployment by approximately 1 percent.

?Consider that 1.5 million jobs are nearly half of the total jobs that the Obama administration hopes to ?save or create? under its recently announced budget plan,? Holtz-Eakin wrote. ?This study suggests that simply killing the estate tax could bring them nearly half way to that goal.?

In an election year, it would be a good idea for the president to listen to Senator Thune. But we would have to assume that President Obama’s goal as president is really to create jobs for the American people rather than create a liberal entitlement culture built on class warfare and envy.

This election is going to come down to voters choosing a hand-up or a hand-out. Ending the death tax is one giant step in the right direction.

29 Replies to “Sen. Thune: "It is time to put a nail in the coffin of the death tax."”

  1. Anonymous

    Love the video. I remember when Thune railed against the death tax in 2004. We made the right decision to get rid of Daschle. Imagine him and Johnson selling South Dakota out for Obama.

  2. grudznick

    I hate to side with Mr. H. on this issue, but Governor Janklow railed against the repeal of the state death tax in his final years. Back around that time my little brother died, and he lived out of state, and while we were happy to not have to pay taxes to South Dakota it seemed stupid to me at the time that South Dakota wouldn’t have taxed my brother’s 3rd wife (who was half his age and is still living fat on the hog out-of-state) before she took all his money to Oklahoma.

    1. Job Creator

      grudznik, South Dakota used to have one of the most repressive inheritance taxes in history, but thanks to two ranch women from around Quinn, the people got together and got rid of it. The state estate tax is a different issue than what Thune is trying to get attention on. However, it’s another great debate under a separate heading.

        1. toad

          As much as I liked Janklow he wasn’t really intune with the conservatives on a lot of issues. And for all of his supporters he never could have defeated John Thune in a primary.

          Janklow was a bull in a china shop. And he wasn’t always right either.

        2. grudznick

          That’s good. Because in Quinn, they’re rebuilding one of the finest roadhouses in west river, and they don’t take kindly to repressive taxes.

  3. Job Creator

    The reality of this tax is that no one with a good estate planning team who is willing to get up off their duff and take some evasive actions would ever have to pay it anyway. Right now a couple with even a dumb lawyer are able to pass down $10 million of assets without a penny of estate taxes due. Those who refuse to take any steps to avoid this tax will be penalized, just as in the rest of life. I wonder how many who participate in this blog have estates over $10 million. And I’d bet you a dollar to a big box of Krispy Kreme donuts that those in here with estates over $10 million have a good estate planning team and are protected.

    For those fortunate enough to have over $10 million in assets, some very well-tested strategies are available. You could literally have an estate of a billion or ten billion and not owe a penny of estate taxes if you take the right steps.

    So John, thanks for the thought. I guess it gets your base wound up and that is good for you – very similar to what you did with your cow fart issue.

    What I wish you would focus on is the shysters who are manipulating the energy markets. You probably know that for every dollar they manipulate the price of a gallon of diesel or gasoline, they suck a BILLION DOLLARS a year out of South Dakota’s economy from farmers and ranchers and working people, school districts and the state government. Kristi has voted several times now in favor of giving those crooks a break on their income taxes.

    How could any thinking person be in favor of that? I can understand the politicians being for it because they sort of represent those money interests, but that does not make it intelligent – or right.

    1. Anonymous

      Because I want the oil companies to keep finding creative ways to find, transport, refine and sell their product. It is a heavily regulated, taxed and competitive business. It pays a lot in taxes and takes advantage of tax right offs just like we do. Mr anti job creator. FYI with your above lack of understanding of basic economics, you CANT be a job creator. Just calling balls and strikes son. Is that young Parker?

      1. Job Creator

        Oh great. Another non-reader/non-thinker calling balls and strikes. Read the post if you can. Market manipulators have cost South Dakota citizens billions of dollars in the last few years. These crooks did not find the oil, drill for it, produce it, transport it, refine it or make a place for us to put it in our vehicles. They were simply parasites on the process, sucking money out without adding any value in (basically like your non-contribution to this thread). They have sucked billions out of our economy by manipulating. Kristi voted several times to cut their taxes. I don’t know how I can simplify my post any more than that. I hope this time you can understand it. I’m betting you can’t.

        1. Big Ern

          You know when Noem was in the legislature she voted to increase spending/taxes/fees 7 times. Look it up.

  4. pickles

    The world would be much better if we could end this tax. I haven’t quite figured out why this socialist policy is in place.

  5. Clay Bill

    Albert Hunt, writing a campaign piece in the fall of 2004 for the Wall Street Journal, noted that President Bush, while running for re-election, told an Iowa farmer in a town-hall meeting that he would be able to keep his family farm if the estate tax is repealed.

    At the same time, Hunt reported, John Thune, running for the Senate against Minority Leader Tom Daschle, made total repeal of the estate tax one of the centerpieces of his quest.

    This may be good politics, but it’s a fraud, Hunt wrote. Several years ago, an Iowa State University economist couldn’t find a single true Iowa family farmer who had to sell the farm to pay estate taxes. In fact, few Iowa farmers pay the tax at all.

    Back in 2004, the now late but never to be forgotten Frank Slagle, a University of South Dakota Law School professor, noted that the estate tax is “irrelevant” to 99 percent of the state’s population.

    I?m no tax expert, but it?s my understanding that there is some type of spousal deduction written into the tax code, meaning that with a family farm, if the husband dies and leaves the assets of the operation to his wife, they aren?t really included as part of the estate.

    Hunt noted the effects of no estate tax would include the loss of about $60 billion a year in federal revenues (back in 2004). It would also adversely affect the coffers of state governments that piggyback off the federal estate tax.

    Hunt adds, ?But there’s another huge problem: it would drain colleges, universities, hospitals, museums and even churches of much needed funds. A recent Congressional Budget Office report unequivocally asserts that repeal of the estate tax will cause a pronounced drop-off in charitable contributions.”

    This also means that Kristi likely was telling a big ol’ whopper when running for the House, as she told a sob story time and time again of how her family had to take out loans to pay estate taxes after her father died in a farm accident. The accident was tragic. The story she wove in 2010 — which has never been substantiated — demonstrates that she’ll say anything, no matter how outlandish, to get elected. Thune is showing that he’s not much better.

  6. Charlie Hoffman

    Clay Bill one needs to go back and find all the changes in Federal tax law relevant to estates and then plug in what an average farm owner was paying. The estate taxes in 1980 were unjustly hammering anyone who had worked and put any type of portfolio together. I should know as my father died that year and the IRS put together a nice 15 year plan of payment for the estate taxes owed. Not sure when Rep. Noems father died but I suspect she is telling the truth and had a similar experience with paying estate taxes on the farm she and her family then owned. If you cannot substantiate the truth then neither can you honestly accuse.

    1. Clay Bill

      Charlie: I suspect aspects of this issue have changed since 1980 … and I would have to think things were different at the time Noem’s dad died, too. I lost my dad suddenly at about the same time as Noem … and no loans needed to be taken out; my parents had properly planned for the unexpected and there was never a fear of losing our farm or seeing our mother being forced to leave it. That’s why Kristi’s story is a bit hard for me to believe. To accept it, I have to conclude that she’s not too good with budgets and planning and understanding the tax code, and frankly, I’d like my representative to have an understanding of those issues.

      Also, please consider this:
      “Permanent repeal of the estate tax would cost almost $1.3 trillion over the first ten years in which its cost would be fully felt, 2012-2021. This includes $1 trillion in lost revenue and $277 billion in increased interest payments on the national debt.
      Making the 2009 estate tax parameters permanent itself would cost $609 billion over this period, or about half as much as repeal ? $485 billion in revenue losses and $124 billion in added interest costs. Making the 2009 parameters permanent thus would be quite expensive, although it would cost $667 billion less than repeal.
      Acting to make the 2009 rules permanent would be more fiscally responsible than various other proposed estate-tax changes. For example, one proposal, advanced by Senator Jon Kyl (R-AZ), would set the estate-tax exemption level at $5 million ($10
      million for a couple) and the top tax rate at 15 percent. Senator Kyl, an advocate of complete repeal of the tax, has commented that an estate tax along these lines ?would be almost as good as full repeal.? That is an apt description of its budgetary effects;
      the proposal would cost 84 percent as much as repeal, adding nearly $1 trillion to deficits over the 2002-2021 period.

      The official ten-year cost estimate is much lower: $670 billion, but that estimate is misleading because it covers a ten year period, 2009-2018, that captures the full cost of only six years of making repeal permanent.
      The Kyl proposal would cost $380 billion more over this period than making the 2009 parameters permanent. Yet the added costs would benefit the estates of only the wealthiest three of every 1,000 Americans who die.
      Given the nation?s serious long-term fiscal problems, repealing or further weakening the estate tax would not be fiscally responsible.” (THE ESTATE TAX: MYTHS AND REALITIES, Center on Budget and Policy Priorities, 2-23-09)

      Here’s the link to the article:
      http://www.cbpp.org/files/estatetaxmyths.pdf

      Every April, Thune and others of his mindset dust off the ol’ “we’re being taxed to death” chestnut as we’re all filling out our income tax forms. They never mention a thing, however, of how much we’ll eventually end up paying, of how much further our nation will sink into debt, or how other institutions will suffer if we start to monkey with parts of the tax code that aren’t really broken, or how what he is proposing may possibly “benefit the estates of only the wealthiest three of every 1,000 Americans who die.”
      Thune is plucking at our heartstrings right now, like he does every April, doing anything possible to score political points while trying to convince us his estate tax myth is true.

  7. Troy Jones

    I have been unable to make up my mind on the concept of whether it is good or not. And everytime I drift toward wanting to keep an inheritance Tax, I read what Hunt said (nobody but the 1% pay it and it costs the government $60 billion a year). Together, it feeds the class war division (it is OK to gore another’s ox, we are leaving yours alone) and it must be highly burdensome on a few.

    Personally, I think it perverse to tax the crap out people when they are working and then say nothing is owed when you die. Personally, I’d like to see lower taxes now and pay something when I die. But then Hunt opens his mouth and I say hold on.

  8. Clay Bill

    I also just watched the Thune video that Bill Clay includes in his blog entry, and I feel I must respond by highlighting this portion of the article I cited earlier, since it specifically addresses the family-owned farm and small business aspect of estate taxes:

    “Myth 3: Many small, family-owned farms and businesses must be liquidated to pay estate taxes.

    Reality: The number of small, family-owned farms and businesses that owe any estate tax at all is tiny, and virtually no such farms and businesses have to be liquidated to pay the tax.
    The estate of only 0.24 percent of all people who die in 2009 (i.e., the estates of between two and three of every 1,000 people who die) are expected to owe any estate tax, according to the Tax Policy Center.

    And only about 1.3 percent of the few estates that still are taxable are small business or farm estates.
    TPC estimates that only 80 small business and farm estates nationwide will owe any estate tax in 2009. This figure represents only 0.003 percent of all estates ? that is, the estates of three out of every 100,000 people who die this year.

    Furthermore, the minuscule number of small business and farm estates that do owe estate tax generally owe only a modest percentage of the estate?s value in tax. The 80 small farm and business estates left by people who die in 2009 that will owe any estate tax will owe the tax at an average rate of just 14 percent.

    Despite the oft-repeated claim that the estate tax has dire consequences for family farms and small businesses, no evidence supports that charge. Indeed, the American Farm Bureau Federation acknowledged to the New York Times several years ago, when the estate tax was more expansive than it is today, that even then it could not cite a single example of a farm having to be sold to pay the estate tax.

    A Congressional Budget Office study, as well, exploded the myth that small businesses and farms have to be liquidated to pay the estate tax. CBO found that of the few farm and family business estates that would owe any estate tax under the 2009 parameters, the overwhelming majority would have sufficient liquid assets (such as bank accounts, stocks, bonds, and insurance) in the estate to pay the tax without having to touch the farm or business.

    For instance, of the 65 farm estates that would owe any tax after the $3.5 million exemption, just 13 could potentially face liquidity constraints, and CBO explained that even this figure likely overestimates the number of farm estates with liquidity constraints, because CBO was unable to take into account certain assets held in trusts (such as life insurance trusts) when calculating the liquid assets available to estates to pay the tax.

    Furthermore, the few, if any, farm estates that would face any liquidity constraints would have other important options available to them ? such as spreading their estate tax payments over a 14-year period ? that would allow them to pay the tax without having to sell off any of the farm assets.”

    1. Troy Jones

      Clay, are you trying to talk me into supporting abolishing the estate tax? Doing a great job.

    2. M.D.

      Clay,

      If one person has to sell the farm its one too many. End the tax.

      On the idea Noem told a big fat whopper you are probably right.

  9. jim

    Are we nuts? Repeal the death tax. Lower or eliminate capital gains taxes. The wealthiest among us pay less than one percent on Social Security because of caps. The Rockefellers might love this but since I am not a millionaire or billionaire, just when do I get to stop paying my $20,000 tax bill? I voted for John Thune and am a conservative Republican but this is exactly how to lose elections. This would mean generation after generation of wealthy people watching the rest of us pay.

  10. Anonymous

    Maybe instead of choosing winners and losers through different tax rates and exemptions all income ought to be taxed as ordinary income, regardless of whether it is earned at a job, through investing, or through inheritance.

    So the guy who sits on his rear and inherits $1 million can pay the exact same tax rate as the guy who sits on his rear and earns $1 million by investing, and the exact same tax rate as the guy who goes out and earns $1 million working.

    Right now, the guy who works pays the highest tax rate, the guy who invests pays the next highest tax rate, and the guy who inherits pays no taxes. But to the person receiving the money, a dollar is a dollar is a dollar regardless of how it comes to them. Go ahead and do away with the estate tax and the capital gains tax – and tax everything as ordinary income.

  11. toga

    Charlie since you know Noem maybe you could fill me in on these questions.

    As a staunch Noem supporter I have one beef with her. I don’t know much about her other than vague generalities.

    When she owned and opperated a hunting lodge how long did she have it open and run it?

    When she worked at the restaurant how long was it open and did she work there?

    And since I’m inclined to believe her on the death tax could she give some examples of how it personally affected her and then work to change them?

    Those are the questions I wish she would fill me in on. Otherwise lets get rid of this awful tax tomorrow!

  12. springer

    I’m just reminded of Herseth’s statement during her campaign at one of her debates that the estate tax was just great because the gov’t really needed that money and deserved it. The wordage isn’t exactly correct, but she stated this with a straight face. I about fainted!

    1. Anonymous

      She ran the worst campaign in SD history.

      It was a wave. SHS did nothing to counter the waves momentum and Noem’s campaign as much as they tried to ruin things with the speeding ticket talk had just enough momentum to win.