To the editor;
I disagree with David Kruse’s position stated in his Feb. 26 column that Congress’s failure to reinstate the step-up basis is of grave concern. Nearly all farm organizations agree with him. They even want estate taxes eliminated so children can hold the operation together without burden of estate tax. They also want stepped-up basis so there will be no taxes if/when they sell the capital assets.
Most are so entrenched in that position they are unwilling to consider an alternative.
Kruse feels the stepped up basis is beneficial for farm owners. Since capital gains tax is incurred only after the capital asset is sold, the basis of a farm only matters to those who liquidate it rather than keeping it as an ongoing business.
How should programs that safeguard our freedoms – including the privilege to acquire and keep privately owned assets – be funded: income taxes only or a combination of income, estate and capital gains taxes?
I agree with Kruse on retaining the estate tax. I regard it as a “user fee” for the freedoms we enjoy living in this county. Assets that pass through an estate are basically “gifts” to the heirs. Claiming otherwise implies the owners did not properly compensate those working with them.
Like it or not, if a person inherits an estate large enough to have a tax liability, but does not have the management skills and borrowing capacity to pay the tax, they are probably not suited for the ownership role.
I suggest a much better alternative for agriculture, for sole proprietorships, would be a package that includes estate tax rate of 50 percent with $3 million per person exemption, elimination of step-up basis and reducing the long term capital gains tax to a flat 5 percent for everyone with a $250,000 lifetime exclusion.
That package would encourage owners to transfer capital assets to desired beneficiaries during their lifetimes rather than holding them until they die. How is that bad? Isn’t that better than owners holding onto an operation after they retire, then willing it to their children who, by then, are nearing retirement age?
Wouldn’t transferring a business to more eager owners stimulate economic activity? Wouldn’t it entice younger families to rural communities if an “heir” starts owning the family farm operation at age 35, rather than 60?
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