Posted on 09/23/2002 5:46:35 AM PDT by wallcrawlr
Is it about farmers and the owners of small businesses? Or is it about multimillionaires?
The national debate over whether to abolish the tax that the federal government levies on large estates revolves around enduring images of "American Gothic"-style family farms and mom-and-pop shopkeepers struggling to stay in business.
Those images aren't terribly accurate.
But that hasn't prevented Democrats and Republicans from seizing the estate tax as a defining issue in close U.S. Senate races this year, including the duel between Paul Wellstone and Norm Coleman in Minnesota.
Republicans want to abolish the tax on farmers, small-business owners and anyone else whose estate — house, property and other assets — is worth more than $1 million. Democrats want to overhaul the tax, not eliminate it.
Each says its plan better protects family farmers and owners of small businesses.
But the reality is that few farmers and small-business owners pay the tax even now.
The Minnesota Department of Revenue estimates that barely three dozen farms are subject to the state's version of the estate tax, even though the state threshold is $700,000 — $300,000 less than the current federal exemption. Moreover, only 325 of the state's nearly 1.9 million households would pay any federal estate taxes.
"There's a huge amount of misrepresentation on this issue," said economist Neil Harl of Iowa State University. "Farmers losing their farms because of the estate tax is a myth."
To the wealthiest Minnesotans, though, the estate tax is very real. And they're supporting the party and candidate whose position best protects their interests.
A Pioneer Press analysis shows that about three dozen of Minnesota's wealthiest families have contributed nearly three-quarters of a million dollars into the effort to elect former St. Paul Mayor Coleman, a Republican.
And while those wealthy families — most of whom live in Edina or around Lake Minnetonka — tend to back the GOP anyway, all stand to benefit from total abolition of what Coleman calls the "death tax."
REPEAL VS. 'REFORM'
Congress has, in a way, already abolished the estate tax. It is being slowly phased out and is scheduled to disappear entirely in 2010. But in a strange twist, the law is then slated to expire — restoring the tax in 2011.
Coleman and many other Republicans want to make repeal permanent. President Bush has stumped across the country demanding total abolition of the levy, and the issue has become part of the debate throughout the Farm Belt.
Democrats, including incumbent U.S. Sen. Paul Wellstone, want to raise the $1 million threshold to at least $4 million, and add a total exemption for family farmers and small-business owners. They say the tens of millions the tax generates each year is better spent on essential government services, especially since the federal budget surplus has evaporated.
A U.S. Department of Agriculture study notes that total abolition of the estate tax would primarily benefit farms worth more than $5 million. Under the proposal Wellstone supports, the USDA estimates that just 1 percent of farms nationally would be subject to the estate tax — even disregarding a built-in exemption for family farms.
The National Republican Senatorial Committee and the White House, which have both taken extraordinary interest in the Coleman-Wellstone contest, hammer away at the issue daily. The estate tax also has become part of the debate in Iowa, South Dakota and Missouri — all places where the GOP hopes to score points with farmers.
Republicans are suggesting in ads and polls that farmers will lose land unless the "death tax" is totally repealed. They say Wellstone claims to be against the tax yet has voted against abolishing it seven times.
Wellstone spokesman Jim Farrell says the Republicans are misstating the senator's position. While Wellstone has voted against total repeal, he has never said he wants to abolish the tax entirely. "We're never going to support repeal," Wellstone spokes-man Jim Farrell said. "We support reform."
Several Republicans prominent in Minnesota and nationally say they're puzzled by the current emphasis on the issue. Before Congress upped the threshold from $675,000 to $1 million last year, the GOP had a political issue that potentially affected anyone with a nice house and a healthy stock portfolio. Now, they say, the Democrat-engineered vote in June to raise the threshold to $4 million — $8 million under certain circumstances — undercuts the usefulness of the estate tax on the campaign trail.
Even former U.S. Sen. Rudy Boschwitz, a Republican and Wellstone's former nemesis, supports the Democrat position.
"An $8 million exemption? I'd be for that," Boschwitz said. He said that would reduce the need for expensive estate planning for all but a few families. Boschwitz said government should not subsidize the rich. But he would not exempt all family farmers.
Coleman, the National Republican Senatorial Committee and allied groups say the June vote was a political ploy by Democrats.
"That vote was designed for exactly what Wellstone is using it for: It was a fig leaf," said Mike Dubke, president of the business-backed Americans for Job Security, a Virginia-based group attacking Wellstone on the issue.
Coleman called the proposal "a sham vote." He said the exemption for farmers and small-business owners in the Wellstone-backed proposal is too cumbersome and makes families spend money on estate planning that could otherwise be spent building their business. And Coleman dislikes a provision in the law that requires a family member to stay involved in the business or farm for at least five years after inheriting it.
Coleman said he wants to go to Washington and abolish the "death tax." But when pressed, Coleman did say he'd accept less than total repeal.
"Look, I prefer to get rid of this tax entirely," he said. "However, I am open to discussing limiting this to only the super-rich, if there was a way we could structure it that way. But that hasn't been on the table."
WHO'S AFFECTED?
Even if Congress does nothing, only a few hundred Minnesota families are affected by the tax. And if it lifts the threshold to $4 million, that number shrinks to just a few dozen.
Who might still be affected? The Pohlad family, the Bingers of 3M, the Carlson sisters of the Radisson hotel chain, Stanley Hubbard of Hubbard Broadcasting, Glen Taylor of the Timberwolves and Richard Schulze of Best Buy — all are members of the Fortune 400. All are financial supporters of Coleman.
Add longtime GOP stalwarts such as the Pillsburys and the Whitneys, and Coleman's support from Minnesota's elite is near total. Of that group, only Vance Opperman, formerly of West Publishing, and the Dayton family are backing Wellstone. Mark Dayton is Minnesota's junior U.S. senator and is a substantial Democratic moneyman.
All told, federal records show 40 of the state's wealthiest families have contributed at least $713,000 to Coleman, his affiliated political action committees, or the National Republican Senatorial Committee. Most notable are father-and-son commercial developers Sidney and John Goodman of Chaska: Combined, they've contributed at least $81,500 to the Coleman effort.
Coleman says the state's wealthy support him because they dislike the union-friendly Wellstone, not because of Coleman's stance on the estate tax.
"Look at who's supporting Paul Wellstone: the trial lawyers. Is that bad? I don't know," Coleman said. He added that Wellstone's position as a champion for Big Labor has made him a natural target for Minnesota's business community.
Reach Hank Shaw at hshaw@ pioneerpress.com or (651) 228-5257.
Two words - almost totally. Thru the use of trusts, holding companies, foundations, etc., it is possible to completely shelter from taxation a formidable amount of assets and income. In many cases, the complexities of this maneuvering are only worthwhile if there are considerable sums at stake - and then they become vital.
For instance, trusts can own real estate. Trusts can MANAGE real estate, and so can foundations. A foundation could, for instance, own (on paper) a huge mansion, and have in its articles that the owners of the foundations and their heirs may have full use of the mansion as a residence. As long as all of the i's are dotted and t's crossed, the foundation can provide for the "de facto" passage of the estate to as many heirs as desired. Of course, foundations must, by definition, make charitable contributions of about 5% of the assets of the foundation annually, so charitable giving is so channeled. To make sure the foundation never goes bust, the foundation (charitable, usually) must have income. That income is not taxable, so a wealthy individual can set up his compensation so that what he gets paid goes to the foundation.
I'm not a tax royer and have never played one on TV, but that's a simplistic explanation of how the system has been set up. There are plenty of other maneuvers, too - and the fat cats have cunningly made these avoidance plans available to all the top people in the media - all to keep them as willing accomplices. Which 'splains why the media are in FAVOR of tax increases - the hikes won't apply to THEM. When you read that a news anchor gets $7M a year, you probably think of a straight salary. Nope. No way. That 7M is sheltered 80 ways from Sunday against taxation - by the same cadre of royers who do Buffett's and everyone else's legal and tax work. You think Catie Colonic is paying taxes on her $15M income? Hah hah. I have some Arizona oceanfront property for you to look at.
Michael
For sure. I'd rather see wage taxes eliminated or severely cut back, wage taxes are far worse than estate taxes. You can't take it with you after all and let the heirs get busy getting to work for a paycheck, work is good for people.
If someone doesn't work for a living ---like many of the Kennedy's ---they get out of paying income taxes. People like that --especially the liberals in politics should be taxed somehow because they believe in having the middle class pay taxes.
Yes, My Mother did that with me and my 3 brothers a couple times. It includes each family member.
You can give $10,000.00 to each child, son or daughter in law, and each grandchild! That can be a lot of money each year!!
"Republican" extremists are Nazis.
That is one of the fundamental differences between us, you are an authoritarian. You believe in and advocate that force is used to achieve political ends. I do not. I also believe in property rights, you do not.
Bears repeating.
Why can't you give away all your money, if it is truly yours?
Your best answer ever.
This is considered a 'gift' and is totaly free of any tax. If you give more than that per year, the recepient pays tax on the excess, at least that's how I believe it to be.
It effectively conveys my boredom of "debating" an intransigent ideologue.
I've posted what I've had to say for the thoughtful consideration of others.
You can return to your routine of projecting false positions on the opinions of others for the purpose of applying derogatory labels.
I have better things to do.
The question is, is that how it should be?
Personal direct taxes are the way the government gains control over private property and wealth. Precisely why it was opposed, and forbidden, by the founders.
When shown for what your positions truly are, it is always a good stategy to disappear.
Boredom isn't your problem, daylight is.
No, absolutly not!! But we don't have much choice, do we? I was just responding to your other question.
While it's generally socialist to suggest that the rich have less "need" of their money than the poor, the Estate Tax generally his hardest those who need their money the most; while the super-rich generally have assets they can afford to take out of circulation for awhile (putting them in trusts, "foundations", etc.) and have ample cash to set aside for the taxes on the money they can't put aside, the tax falls hardest on those who don't have any spare money.
BTW, today's SS/Medicare/Medicaid system is set up to achieve the same effects on those slightly lower on the totem pole.
Yes, well it all boils down to what is probably the biggest, dirtiest, lie in all of American Politics: that the GOP is the party of the super-rich and big business. Unfortunately, the Democrats have successfully deceived the vast majority of the American populace into believing that. The truth is that both "big business" and the "super-rich" rely upon the Democrats to protect them from competition. Republicans are the party of startup businesses and social climbers. Businesses and people who have "made it" often support the Democrats, not because they want to help those below, but rather because they want to keep the "little people" in their place.
I wish there were some way to expose the Democrats' fundamental lie, since it would cause their façade to totally unravel.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.