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The threshold for inheritance taxes in the US is so high that very few family businesses are impacted. A small fraction of family-owned businesses are worth mo

by jaxn 10y ago

The threshold for inheritance taxes in the US is so high that very few family businesses are impacted. A small fraction of family-owned businesses are worth more than $5 million. That family-farm comment sounds more like an out-dated PR talking point than a legitimate concern in 2017.

AnthonyMouse 10y ago
This is what farms, or many family businesses in general, look like. A light truck or small tractor is five figures. A larger truck or tractor can be a quarter of a million. A combine harvester is half a million. Livestock would add six figures. The land itself will typically be worth seven figures. Add these together, more than one of some, plus sprayers and irrigation systems and various other pieces of farm equipment each in the five to six figure range, farmhouse, feed and crop storage and other structures, you can easily exceed five million dollars. Many businesses are very capital-intensive. And a farm is just an example. A family construction business is going to own the same sort of expensive industrial equipment. A family that owns and operates residential apartments could exceed that amount with one building in many cities. The only reason very few family businesses are impacted is that the ones who failed to engage in tax planning to avoid it were dismantled by the tax a generation or more ago and the remaining families do the tax planning. But what's the point of specifically screwing over the families without the civic disloyalty to rearrange their affairs that way?
- jaxn 10y ago
  I started a family-owned retail business with my father and have been growing it for 13 years. I get it. The farm example is trotted out all the time because it is an emotional example. But it isn't really a meaningful one. The 2016 estimates from the USDA states that 98.3% of family farms would not need to file a estate-tax return at all. Of the 1.7% that do need to file a return, the vast majority of those would owe no taxes. Only 0.4% of family farms will owe any estate tax for 2016. It only affects a very small percentage of family farms. And yet it is the go-to example of how the estate tax isn't fair.
  - AnthonyMouse 10y ago
    > Only 0.4% of family farms will owe any estate tax for 2016. The estate tax comes due when someone dies. Most people don't die in a given year. And those numbers are artificially low on top of that because many of the affected families only don't owe estate tax because they did estate tax planning.

by jaxn 10y ago

AnthonyMouse 10y ago

This is what farms, or many family businesses in general, look like. A light truck or small tractor is five figures. A larger truck or tractor can be a quarter of a million. A combine harvester is half a million. Livestock would add six figures. The land itself will typically be worth seven figures. Add these together, more than one of some, plus sprayers and irrigation systems and various other pieces of farm equipment each in the five to six figure range, farmhouse, feed and crop storage and other structures, you can easily exceed five million dollars. Many businesses are very capital-intensive. And a farm is just an example. A family construction business is going to own the same sort of expensive industrial equipment. A family that owns and operates residential apartments could exceed that amount with one building in many cities. The only reason very few family businesses are impacted is that the ones who failed to engage in tax planning to avoid it were dismantled by the tax a generation or more ago and the remaining families do the tax planning. But what's the point of specifically screwing over the families without the civic disloyalty to rearrange their affairs that way?

jaxn 10y ago
I started a family-owned retail business with my father and have been growing it for 13 years. I get it. The farm example is trotted out all the time because it is an emotional example. But it isn't really a meaningful one. The 2016 estimates from the USDA states that 98.3% of family farms would not need to file a estate-tax return at all. Of the 1.7% that do need to file a return, the vast majority of those would owe no taxes. Only 0.4% of family farms will owe any estate tax for 2016. It only affects a very small percentage of family farms. And yet it is the go-to example of how the estate tax isn't fair.
- AnthonyMouse 10y ago
  > Only 0.4% of family farms will owe any estate tax for 2016. The estate tax comes due when someone dies. Most people don't die in a given year. And those numbers are artificially low on top of that because many of the affected families only don't owe estate tax because they did estate tax planning.