Here’s an issue where Senator Rounds has broken from his South Dakota colleagues in Washington. Apparently, he’s one of two Republicans in the US Senate who is offering a dissenting opinion on the estate tax:
The party’s leaders included estate-tax repeal in the tax-overhaul framework they released last week. But Republican Sens. Mike Rounds of South Dakota and Susan Collins of Maine said this that week repeal isn’t necessary. Others say their desire to eliminate the tax must be balanced against other priorities including tax cuts for businesses and middle-class families.
“I don’t think we have to totally repeal it because I think the folks on the upper end of it are all avoiding it right now legally anyway,” Mr. Rounds said Wednesday. “For me, we can’t fail on [a tax overhaul] and whatever we can do to pick up the last few votes we may need, I’m ready to negotiate.”
The issue has already caught the attention of at least one South Dakota group, the South Dakota Stockgrowrrs, whose president disagrees:
The death tax has been in the news a lot lately and has been accused of being a tax that only the rich have to worry about. The problem with giving this tax the title of the “Robin Hood” of taxes is it forgets to take into account the backbone of America, the ones that raise the food. I am very concerned, today after reading the comments of South Dakota Senator Mike Rounds announcing his opposition to the Republican Party’s long time goal of repealing the death tax.
And..
I’m not sure what caused Senator Rounds to do a complete turnaround in the last couple of months but I feel the family farmers and ranchers of South Dakota deserve an explanation. It’s hard to believe a Senator from South Dakota would be quoted as saying the death tax repeal is unnecessary when it will at some point affect one-third of the farmers and ranchers in the state that he represents.
I believe Senator Rounds is trying to say that as part of tax reform, everything must be on the table and balanced against the greater good. But obviously, there’s some who disagree.
What are your thoughts?
Rounds said it is not necessary “because I think the folks on the upper end of it are all avoiding it right now legally anyway”. So if certain folks are avoiding it legally anyway and then only people on the lower ends of it pay it and he wants to ease the tax burden for the people on the lower end of it, why have it at all? It seems to me this is an example of a tax that is aimed at a certain group and winds up hitting the wrong group. BTW, IMHO, the taxes have already been paid once by the person leaving the estate.
Couldn’t agree more. Keep the current system but crank up the maximum lifetime exclusion to around $50-$75 million. That would put 99% of farms and family businesses outside or on the low end of any tax liability.
99% of farms and small businesses already are out. 50-75 million dollar farms and small businesses in sd under single family control? I dare you to find 4.
Susan Collins is ranked 3rd in the Top 25 RINOs, that could say it all.
Not a good move, Rounds, not a good move.
SDStockholders say, “it’s hard to believe”…No, it’s really not that hard.
It looks like he’s placing himself in a position to negotiate with his own leadership by appearing to be on the fence on this. He clearly states he’s “ready to negotiate.” This could put our state in a position to get what we want and some! It’s like a Rand Paul/Ted Cruz move except Rounds will actually negotiate and vote on republican tax reform.
This is a signal that he’s not running in 2020.
It’s an emotional issue to many on both sides.
Taking money from the dead at the cost of straining the survivors is in poor taste. Collect your taxes fair and square, in the light of day, above ground.
Straining the survivors? Ha, that’s a good one.
It makes for bad optics that the Republican Party is always fighting to cut taxes for multi-millionaires while at the same time trying to throw 20 million people off of their health insurance plans.
What Rounds is saying is that there are more important things to focus on than eliminating a tax that only hits individuals worth over $5.5 million and couples worth over $11 million. Do those people really need to be first in line for tax relief? That question answers itself.
I’m so tired of the mantra that Obamacare repeal would throw X number people off their health insurance plans. What about the people that Obamacare itself threw off their plans,
like my son? Where was the left’s outrage then? What about the people that now can’t afford health care because of the skyrocketing premiums and deductibles? What about the people forced to pay for benefits they don’t need (men for OB care, women for prostate issues)? What about the perfectly good and liked insurance plans and companies. That no longer exist?
This statement will be front and center in Rounds’ next primary. Good luck with that!
I’m surprised that Rounds would carve this separation between Thune and Noem. Thune made this a hallmark issue against Daschle in 2004: https://youtu.be/w12obStHJDE
And Noem: “The cruel shock of the death tax hit hard for Kristi Noem and her family when her dad died in a farm accident. Just a college student at the time, Noem returned home to run the farm. But then the IRS came calling – asking for cash the family did not have.
The family was able to secure a loan to eventually pay off the tax, but the sting of this double blow was what drove the U.S. Congresswoman from South Dakota to later enter politics. This month Rep. Noem (R-SD), along with U.S. Congressman Sanford Bishop (D-GA), introduced legislation to permanently repeal the death, or estate, tax. The legislation is also being introduced in the Senate by Senator John Thune (R-SD).”
I’m surprised of all tax issues he’d differ with them on something so near and dear to their hearts. It’s not a small issue to the SD delegation.
That impacts a couple hundred sd families at most.
You might be right but why should people that are close to the limit have to spend tens of thousands of dollars for appraisal fees, accountant fees, and attorney fees to prove to the IRS that they do NOT owe any estate tax?
Rounds is the only one of South Dakota’s 3 congress members with an estate large enough to be impacted by the estate tax. He’s saying, “Look, I’m smart enough to get around the existing law and so are most people who are worth $11 million. If we don’t repeal it, so what? Only dummies are paying it anyway.”
You are correct. All you need is a good Tax Attorney, not another law.
If no one is paying it, what’s the purpose of the law? To guarantee tax attorneys a job?
While I think he will clarify his exact position, I think it’s a good move to say he’s willing to negotiate on a cap to the death tax exemption. If we don’t do something about our broken tax system and we’ve proven time and time again even while controlling congress and the White House we can’t pass anything without a few democrats nobody will acquire enough wealth to worry about it.
Are we really willing to blow up tax reform over no death tax on any amount? I for one am happy to see someone in dc willing to move the ball on something rather than sit in their own corner and cry about the other side not wanting to help and meanwhile absolutely nothing good happens.
You can’t complain about dysfunction in dc and also say our own officials shouldn’t be the ones participating in a little negotiation.
Bwahahahaha! News flash! He’s a tax and spend RINO!
If govt would learn to live within it’s means, get rid of waste, implement term limits, etc, taxes could all go down for everyone. But that’s living in a dream world.
Springer – If people that think like you would agree to work for half wages, we could all pay even less taxes and live in third world conditions. OR, if everyone was paid twice what they make now, we could pay more taxes, have a better state and have more take home pay like Minnesota, California, Washington etc. You choose, ma’am!! (Thinking like your’s is why young people move away.)
Jensen, do you realize how false economically your statement is? You’d flunk Econ 101 if you applied that in a single answer. And after factoring in cost of living, South Dakotans have more net take-home pay than the states you mention above.
Please tell me you have yet to graduate from college. I don’t need further confirmation of the idiots graduating from colleges in this country.
I have never been for an elimination the inheritance tax. I would rather have lower taxes while alive and pay taxes when I die.
Pretty cynical view considering your loved ones are left paying the tax, if it were to apply to you.
If Troy and his wife died in a car crash tomorrow and left their $11 million estate to the kids, the IRS would collect $8,000 in estate taxes. Is that really a burden on the loved ones left paying the tax on an $11 million estate?
Troy, that’s a very selfish comment.
I’m confused. Besides expressing my personal preference, what in particular is selfish?
Anon 12:14 AM you must be an Obama IRS Agent who previously was secretly snooping on Mr. and Mrs. Jones’s personal finances hoping to uncover fraud for the Democrat Party! LOL
BTW the $50 million exemption is a stellar idea and a great start but knowing the level of putrid hatred and toxic mold in DC today my bet is nothing gets done in the next three years and then the Democrats can bring in one of their dinosaurs to run and win and the Republicans can bring in a scape goat and continue playing their best game. Defense
You have uncovered my secret Charlie. But what are you doing on this blog at 6:00 am on a Sunday?
I thank you for the concern of my children.
Just to be clear: Heirs do not pay inheritance taxes. The deceased pays it upon transfer of the estate they earned to the ones who didn’t earn it.
Personally, I think the exemption should be lower, it should be taxed at capital gains rates (not to exceed 15%), and we move on.
BTW, I think politicians have over-estimated the political appeal of repealing the inheritance tax. Yes, its a popular idea but not as popular or powerful as they think.
A little estate tax 101. A person can currently leave about 5.3 million to heirs. Married couple 11.6. This goes up every year by COL. If a farmer dies with 5 mill in land that he paid 500k for the kids get the land tax free with a tax basis of 5 mill. That is called a stepped up basis. That means if they sell it the day after they get it there is no taxable gain. This is a great benefit to most families. In the past plans to repeal the death tax have then required the heir receive the property at the deceased’s basis. In the example above that results the heir paying tax on 4.5 mill when they sell the property rather than zero. How does that benefit most South Dakotans? Therefore, ask what happens to stepped up basis before deciding whether the repeal of the estate tax is any good.
Regarding family farms and businesses, if they are worth more than 11.6 million the estate tax can still be avoided if the family continues to operate the family farm or business as a family venture for 10 more years. Thus, no estate tax.
When the republican party made this an issue the exemption was one million and not indexed for inflation. When Obama was pres and the republican congress was able to increase the exemption at 5 mill and index the republican congress eliminated the tax for almost all families and keep the step up. It was a great legislative win that went unnoticed.
How pissed do you think Thune and Noem are? They are the biggest leaders in the Senate and House, respectively, on this issue and their delegation mate just got weak knees on it.
Bartender, you are 90% right. If the ranch/ family business is large enough in the estate, you can pay the estate tax over time through installment payments to the IRS. You don’t avoid it.
You can also get a reduced special ag valuation for a portion of the estate. That is avoided until it is sold for a higher value, then additional caoital gains tax kicks in.
I AGREE on the win. We just need a bit more of that so family businesses and ranches don’t have to liquidate to Pay the tax. Ranch property with current values will never again be paid off with raising livestock. So is if MMRounds can negotiate that increase but not eliminate it fully to get other tax reform done, another win IMHO.