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And with this law passing, the death of the family farm is complete. Now instead of the midwest being full of family farms passed from father to son, we'll onl

kiba 16y ago
Being able to preserve wealth within a family is a skill in itself. If anything, million dollars fund is one of the biggest challenge that any kid would have. Any kid who have managed to keep their fund growing deserve a kudos in my book because they didn't squander their money in questionable investment schemes. Remember, lottery winners typically all went broke. Very few have the financial skills to grow it.
- timwiseman 16y ago
  If anything, million dollars fund is one of the biggest challenge that any kid would have. It is a challenge most people would gladly take.
ricree 16y ago
From what the article says, it sounds like the tax is reverting back to a previous level. I'm sure this will do little to help family farms. However, if it didn't kill them off the last time it was there, then what makes this time around so much more terribly.
timwiseman 16y ago
And with this law passing, the death of the family farm is complete. Now instead of the midwest being full of family farms passed from father to son, we'll only have corporate farms, since the typical family can't come up with the cash to cover half the value of their land that now belongs to the government. According to the article, the lowest exemption amount being discussed is $1 Million. According to wikipedia, the average value of a family farm is $250,000 in the US, so in other words this will not impact the average family farm at all. (As a side note, my mother's side of the family does maintain a family farm passed through generations and it is currently worth substantially less than that...) When you are talking about the truly large family farm worth over $1 Million, remember, that first million is still exempt, only the value over a million is taxed. This means that only a farm worth substantially over a million is at risk of unmanageable tax bills. A farm that large will look a lot like a corporate farm even if sole ownership has been passed through generations, and a farm owner with that kind of resources likely has a large life insurance policy that will help defray those taxes somewhat. [Edit: spelling and grammar]
JoeAltmaier 16y ago
Family farms in Iowa have been dead for a generation. My brother is the youngest member of his "future farmers" group - he's 55. Corporations manage most of the land in my county, and its not very different elsewhere.
- JoeAltmaier 16y ago
  Anyway, most canny farmers have incorporated. The heirs get stock, not the farm. So taxes are avoided/deferred.
starkfist 16y ago
The family farm has always qualified for a $1,000,000 deduction from the estate tax. http://www.irs.gov/businesses/small/article/0,,id=108143,00.html#8 http://www.irs.gov/businesses/small/article/0,,id=108143,00.... The fact is that most of the "family farms" that still exist are actually huge multi-million dollar operations.
damoncali 16y ago
That is the problem nobody talks about - illiquid assets. The estate tax destroys value when sales are forced to cover the taxman's bill. It's not just farms, but any illiquid business.
wglb 16y ago
The ongoing death of the family farm is a complex and challenging process. First, few other walks of life saw technology improve productivity by an order of magnitude or more in the space of a generation. During one stretch of personally observable time, between the time I was 3 and the time I was 13, the cost of a particular tractor went from 1300 bushels of wheat to 6500 bushels of wheat. Farm subsidies have had interesting impacts on not only how farms have run, but shifts of political power and in fact the structure of that society. And as another commentor says, other structures of ownership (corporations, LLC, trusts) can protect the family's ownership. In any practical sense, inheritance tax doesn't really hasten the death of the family farm at all.

kiba 16y ago

Being able to preserve wealth within a family is a skill in itself. If anything, million dollars fund is one of the biggest challenge that any kid would have. Any kid who have managed to keep their fund growing deserve a kudos in my book because they didn't squander their money in questionable investment schemes. Remember, lottery winners typically all went broke. Very few have the financial skills to grow it.

timwiseman 16y ago
If anything, million dollars fund is one of the biggest challenge that any kid would have. It is a challenge most people would gladly take.

ricree 16y ago

From what the article says, it sounds like the tax is reverting back to a previous level. I'm sure this will do little to help family farms. However, if it didn't kill them off the last time it was there, then what makes this time around so much more terribly.

timwiseman 16y ago

And with this law passing, the death of the family farm is complete. Now instead of the midwest being full of family farms passed from father to son, we'll only have corporate farms, since the typical family can't come up with the cash to cover half the value of their land that now belongs to the government. According to the article, the lowest exemption amount being discussed is $1 Million. According to wikipedia, the average value of a family farm is $250,000 in the US, so in other words this will not impact the average family farm at all. (As a side note, my mother's side of the family does maintain a family farm passed through generations and it is currently worth substantially less than that...) When you are talking about the truly large family farm worth over $1 Million, remember, that first million is still exempt, only the value over a million is taxed. This means that only a farm worth substantially over a million is at risk of unmanageable tax bills. A farm that large will look a lot like a corporate farm even if sole ownership has been passed through generations, and a farm owner with that kind of resources likely has a large life insurance policy that will help defray those taxes somewhat. [Edit: spelling and grammar]

JoeAltmaier 16y ago

Family farms in Iowa have been dead for a generation. My brother is the youngest member of his "future farmers" group - he's 55. Corporations manage most of the land in my county, and its not very different elsewhere.

JoeAltmaier 16y ago
Anyway, most canny farmers have incorporated. The heirs get stock, not the farm. So taxes are avoided/deferred.

starkfist 16y ago

The family farm has always qualified for a $1,000,000 deduction from the estate tax. http://www.irs.gov/businesses/small/article/0,,id=108143,00.html#8 http://www.irs.gov/businesses/small/article/0,,id=108143,00.... The fact is that most of the "family farms" that still exist are actually huge multi-million dollar operations.

damoncali 16y ago

That is the problem nobody talks about - illiquid assets. The estate tax destroys value when sales are forced to cover the taxman's bill. It's not just farms, but any illiquid business.

wglb 16y ago

The ongoing death of the family farm is a complex and challenging process. First, few other walks of life saw technology improve productivity by an order of magnitude or more in the space of a generation. During one stretch of personally observable time, between the time I was 3 and the time I was 13, the cost of a particular tractor went from 1300 bushels of wheat to 6500 bushels of wheat. Farm subsidies have had interesting impacts on not only how farms have run, but shifts of political power and in fact the structure of that society. And as another commentor says, other structures of ownership (corporations, LLC, trusts) can protect the family's ownership. In any practical sense, inheritance tax doesn't really hasten the death of the family farm at all.