Few federal tax policies are as immediately revolting as the death tax. The idea that the government has the right to confiscate a set percentage of an individual’s assets after his death strikes us as downright immoral. It punishes grieving family members, adds stressful burdens both before and after death, and lets government step between the dying person and their bequest to the designated inheritors. Moreover, it's double taxation because the deceased person already paid taxes on the income used to buy his assets.
It's particularly troublesome to Montana ag and small business owners. The last thing Montana’s ranchers and farmers need is to have Uncle Sam confiscating almost half of their property instead of allowing it to transfer to their family. Thus, I'd like to take solace that the death tax may be reduced or abolished when Sen. Max Baucus, chairman of the Senate Finance Committee, says things like, “We cannot let Montana families get hit with an estate tax hike next year … I'm doing all I can to get the best possible deal to make sure family farms and ranches can stay in the family where they belong.” After all, Sen. Baucus’s chairmanship gives him the power to hold hearings on the elimination of the death tax, fight for legislation that eliminates the death tax, and make it a part of his policy agenda to eliminate the death tax. If he really was doing “all I can” to ensure the protection of Montana’s ranchers and farms from Uncle Sam’s greedy grasp, he should be doing these things.
But instead, Sen. Baucus has done practically nothing to abolish the death tax thus far in the new session of Congress.
In fact, Baucus voted for an increase to the death tax when he voted for the poorly named American Taxpayer Relief Act at the beginning of the year. The provision permanently raised the maximum death tax rate from its previous level at 35 percent to 40 percent.
Individuals are allowed to transfer up to $5.25 million to surviving family members, but they will get slammed at 40 percent taxes if the amount of their assets exceeds the $5.25 million mark. This can easily be the case with Montana family farms and, farmers — who are usually land rich and cash poor — can find themselves needing to sell the farm to pay the 40 percent tax.
For a senator that talks big about the death tax when he’s addressing his constituents, Sen. Baucus’ complicit non-action on this issue casts significant doubt on his credibility. If he truly stands by his words that he is “doing all I can” to make sure that the estates of Montana’s ranchers and farmers go to their family members after death, then why has he not done anything to match his talk?
Montana’s farmers and ranchers currently pay an arm and a leg in taxes on the income they already make. Taxing them again through the death tax is an immoral form of double or triple taxation on the same wealth they’ve already paid taxes for over their entire lives. Their family members don’t need to deal with the hassle and stress that comes from the death tax when they eventually die.
It’s time for Baucus to use his position as Finance Chair to put action behind his words and put an end to the death tax, not just for Montana, but for all Americans.
(Henry Kriegel is the deputy state director of the Montana chapter of Americans for Prosperity.)