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> The current exemption is more than $5 million. People saying that are full of shit. Have you looked at land, livestock, infrastructure, and equipment costs t

> The current exemption is more than $5 million. People saying that are full of shit. Have you looked at land, livestock, infrastructure, and equipment costs they tax? People saying that are not "full of shit" and an unexpected death can ruin not only the farming family but the folks they hire.

maxerickson 10y ago
An enterprise valued at more than $5 million, with lots of employees, is not a "family farm", at least not in the traditional sense. I totally agree that a tax on inheritances above $5 million will tend to impact family owned businesses worth $5 million though.
- protomyth 10y ago
  Actually, in North Dakota it is a family farm since we specifically outlaw corporate farms. $5 million when the combine (or some tractors if renting the combines) is a $1 million plus some storage bins and the per acre cost of farmland is not a big farm. So, in the traditional sense, farming is really easy to tax infrastructure activity. That is why that tax is so hated. Farms are damn expensive.
  - maxerickson 10y ago
    I'm pretty sure other millionaires hate taxes too.
    - protomyth 10y ago
      Millionaire only when the tax man comes calling is quite a bit different than Silicon Valley millionaire after an IPO.
      - pcwalton 10y ago
        It sounds to me like the problem here is the specific combination of the state statute requiring farms to be owned by families and the federal estate tax. If so, it seems that there are multiple ways to solve this problem without wholesale repeal of the tax. Nobody wanted the estate tax to mean "the government gets 10% of Wal-Mart when Sam Walton dies". If that's the outcome that results in some cases, then fix that problem.
        protomyth 10y ago
        Fixing the problem is pretty simple, repeal the tax. Its unseemly to tax a person when they die. Just the adding of grief (which I have recently experienced) is something we should not do to people. Plus, the continuing of this tax makes it hard for new family businesses (and a lot of minority owned family businesses are new) to build up like the incumbents were allowed.
        pcwalton 10y ago
        You've shifted your argument to one that is not particularly convincing to someone who doesn't already share a right wing economic view. The North Dakota farm issue was interesting, as something I wasn't aware of (and thank you for bringing it up!) I'm less interested in engaging with the general libertarian argument against taxation.
        crzwdjk 10y ago
        There's no a priori reason that property rights should survive a person's death, and plenty of arguments against allowing hereditary accumulation of wealth. Note also that currently the first $5.5 million is exempt, which is more than enough for the vast majority of individuals and even quite a few small businesses.
  - shuntress 10y ago
    Is it something specific to farming? How is that different from, for example, $5,000,000 to buy a lot, build a gym, and stock it with equipment?
    - protomyth 10y ago
      Don't know, never really talked to a gym owner before, but my suspicion is that it probably is a huge problem for anyone who builds up assets (that a tax person values highly) to do the job but not a lot of actual cash to pay the taxes. I think land or infrastructure intensive activities are probably all in the same boat.
- Alupis 10y ago
  > An enterprise valued at more than $5 million, with lots of employees, is not a "family farm" What? Plenty of small businesses can generate more than $5 million in revenue annually, but still be a small family business. $5 million sounds like a lot for an individual, but for a business, not so much... especially after all the expenses that come with operating a business and having employees. We're talking about farms here, farming equipment alone could be valued several million dollars by itself. The $5 million figure is the value of the business, which includes assets and projected revenues (not profits!)... it's quite possible for someone to inherit a family farm and immediately be financially ruined... buried under a large income tax bill.
  - maxerickson 10y ago
    Yes, I understand what "value" is. You are muddying the distinction between revenue and value in your first paragraph and correcting my understanding in the 2nd. Why? There is an argument to be made, that the valuations used are unfair, but if you inherit an actual $6 million operation and are forced to liquidate to pay the $200,000 tax bill, I doubt you are financially ruined. In fact, I expect you are a cash millionaire.
    - protomyth 10y ago
      > if you inherit an actual $6 million operation and are forced to liquidate to pay the $200,000 tax bill, I doubt you are financially ruined. In fact, I expect you are a cash millionaire. You make the assumption that you are able to sell the operation for the tax value which is a pretty wrong one. Plus, ignoring the people who depended on the continuing operation of the family business is not a good thing. Never mind the psychological damage of destroying what the family has worked for at a time when you need help not the tax man ripping down what you built.
      - maxerickson 10y ago
        You'd still be a millionaire if you managed 1/6th of the taxable value. And of course, if we fixed the system for valuing the property, it sounds like no tax would be paid. I get that you think it is unfair to tax wealth at death. That's fine. Land and tractors aren't special wealth, that's where my "full of shit" came from. As far as the timing of the tax, there's plenty of people that go through the death of relatives while being completely financially insecure.
- ars 10y ago
  > An enterprise valued at more than $5 million, with lots of employees, is not a "family farm", at least not in the traditional sense. Of course it is. A non-luxury house can cost $1 million in certain places. A family farm with a couple of siblings and equipment can easily reach $5 million. If your yearly profit on investment is 10% then an income of $50,000 / year needs half a million investment. You just need 10 people (3 families and some hired hands) to reach $5 million. I hope you can agree that parents plus 2 married kids is a family farm.
  - maxerickson 10y ago
    If the ownership is diffuse, the inheritance tax won't apply until the farm is worth some multiple of $5 million.
    - ars 10y ago
      It's owned by the parents, and the kids get salary and "shares" - i.e. inheritance.
      - maxerickson 10y ago
        It has to be one way or the other. You made the kids investors to make it easy to get to $5 million but now they aren't investing anything, only working and inheriting.

maxerickson 10y ago

An enterprise valued at more than $5 million, with lots of employees, is not a "family farm", at least not in the traditional sense. I totally agree that a tax on inheritances above $5 million will tend to impact family owned businesses worth $5 million though.

protomyth 10y ago
Actually, in North Dakota it is a family farm since we specifically outlaw corporate farms. $5 million when the combine (or some tractors if renting the combines) is a $1 million plus some storage bins and the per acre cost of farmland is not a big farm. So, in the traditional sense, farming is really easy to tax infrastructure activity. That is why that tax is so hated. Farms are damn expensive.
- maxerickson 10y ago
  I'm pretty sure other millionaires hate taxes too.
  - protomyth 10y ago
    Millionaire only when the tax man comes calling is quite a bit different than Silicon Valley millionaire after an IPO.
    - pcwalton 10y ago
      It sounds to me like the problem here is the specific combination of the state statute requiring farms to be owned by families and the federal estate tax. If so, it seems that there are multiple ways to solve this problem without wholesale repeal of the tax. Nobody wanted the estate tax to mean "the government gets 10% of Wal-Mart when Sam Walton dies". If that's the outcome that results in some cases, then fix that problem.
      - protomyth 10y ago
        Fixing the problem is pretty simple, repeal the tax. Its unseemly to tax a person when they die. Just the adding of grief (which I have recently experienced) is something we should not do to people. Plus, the continuing of this tax makes it hard for new family businesses (and a lot of minority owned family businesses are new) to build up like the incumbents were allowed.
        pcwalton 10y ago
        You've shifted your argument to one that is not particularly convincing to someone who doesn't already share a right wing economic view. The North Dakota farm issue was interesting, as something I wasn't aware of (and thank you for bringing it up!) I'm less interested in engaging with the general libertarian argument against taxation.
        crzwdjk 10y ago
        There's no a priori reason that property rights should survive a person's death, and plenty of arguments against allowing hereditary accumulation of wealth. Note also that currently the first $5.5 million is exempt, which is more than enough for the vast majority of individuals and even quite a few small businesses.
- shuntress 10y ago
  Is it something specific to farming? How is that different from, for example, $5,000,000 to buy a lot, build a gym, and stock it with equipment?
  - protomyth 10y ago
    Don't know, never really talked to a gym owner before, but my suspicion is that it probably is a huge problem for anyone who builds up assets (that a tax person values highly) to do the job but not a lot of actual cash to pay the taxes. I think land or infrastructure intensive activities are probably all in the same boat.
Alupis 10y ago
> An enterprise valued at more than $5 million, with lots of employees, is not a "family farm" What? Plenty of small businesses can generate more than $5 million in revenue annually, but still be a small family business. $5 million sounds like a lot for an individual, but for a business, not so much... especially after all the expenses that come with operating a business and having employees. We're talking about farms here, farming equipment alone could be valued several million dollars by itself. The $5 million figure is the value of the business, which includes assets and projected revenues (not profits!)... it's quite possible for someone to inherit a family farm and immediately be financially ruined... buried under a large income tax bill.
- maxerickson 10y ago
  Yes, I understand what "value" is. You are muddying the distinction between revenue and value in your first paragraph and correcting my understanding in the 2nd. Why? There is an argument to be made, that the valuations used are unfair, but if you inherit an actual $6 million operation and are forced to liquidate to pay the $200,000 tax bill, I doubt you are financially ruined. In fact, I expect you are a cash millionaire.
  - protomyth 10y ago
    > if you inherit an actual $6 million operation and are forced to liquidate to pay the $200,000 tax bill, I doubt you are financially ruined. In fact, I expect you are a cash millionaire. You make the assumption that you are able to sell the operation for the tax value which is a pretty wrong one. Plus, ignoring the people who depended on the continuing operation of the family business is not a good thing. Never mind the psychological damage of destroying what the family has worked for at a time when you need help not the tax man ripping down what you built.
    - maxerickson 10y ago
      You'd still be a millionaire if you managed 1/6th of the taxable value. And of course, if we fixed the system for valuing the property, it sounds like no tax would be paid. I get that you think it is unfair to tax wealth at death. That's fine. Land and tractors aren't special wealth, that's where my "full of shit" came from. As far as the timing of the tax, there's plenty of people that go through the death of relatives while being completely financially insecure.
ars 10y ago
> An enterprise valued at more than $5 million, with lots of employees, is not a "family farm", at least not in the traditional sense. Of course it is. A non-luxury house can cost $1 million in certain places. A family farm with a couple of siblings and equipment can easily reach $5 million. If your yearly profit on investment is 10% then an income of $50,000 / year needs half a million investment. You just need 10 people (3 families and some hired hands) to reach $5 million. I hope you can agree that parents plus 2 married kids is a family farm.
- maxerickson 10y ago
  If the ownership is diffuse, the inheritance tax won't apply until the farm is worth some multiple of $5 million.
  - ars 10y ago
    It's owned by the parents, and the kids get salary and "shares" - i.e. inheritance.
    - maxerickson 10y ago
      It has to be one way or the other. You made the kids investors to make it easy to get to $5 million but now they aren't investing anything, only working and inheriting.