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100% I come from a family of farmers. The land is worth a lot but also has large notes on them. If you see the way these farmers live, NOBODY would call them

100% I come from a family of farmers. The land is worth a lot but also has large notes on them. If you see the way these farmers live, NOBODY would call them rich. They never sell and the land gets passed from generation to generation. All the income from farming goes back into the farm (notes, taxes, supplies, maintenance).

ryandrake 2y ago
Huh... I must be missing some huge bit of information, then. Using my example, how is the business worth $14M if it's not making, say, $1M a year? If it's not making any money, wouldn't the value be much less? Maybe the current business value is very low, but the land is worth $14M because someone else could make more money with it. In that case, the wisest decision would be to sell it, use the proceeds to pay off the taxes and whatever liens are hanging around, and then invest the balance more productively. Say you have $10M left over after settling taxes and debts. That's still a huge windfall, and anyone living on that farm would never be poor again. Invested wisely, and that family never works a day in their life again. Hell, a risk-free 30 year US Treasury bond is paying in the neighborhood of 4.5% now. That windfall could be turned into a risk-free salary of $450,000/yr, with zero investing skills.
- FrustratedMonky 2y ago
  Sorry. don't have a good example with math. I think the issue is that in the 70's the cut off was lower, below 13M. And stocks/bonds were also not doing as well so the concept of selling and investing and living off that wasn't possible. And possibly a lot of farmers had loans, large debt. I'd need to find all the pre-inflation 70's examples. I just remember at the time the farmers were kind of stuck in a catch-22. Probably does not apply to todays farmers. But you are correct, with your numbers. If the land really is worth that much, they could sell and re-invest.
- deleted 2y ago
  [deleted]
Terr_ 2y ago
> The land is worth a lot but also has large notes on them. Assuming you mean debts/mortgages, those already get subtracted from the valuation of the estate [0] which means the farmers you're worried about are even further away from having to worry about the Estate Tax. > NOBODY would call them rich. Again, I think that get some clear estimates and go through the math, you'll see that "think of the poor farmers" is a myth promoted by certain non-farmers, where both of us would call them rich. [0] https://www.investopedia.com/terms/a/adjusted-gross-estate.asp https://www.investopedia.com/terms/a/adjusted-gross-estate.a...

ryandrake 2y ago

Huh... I must be missing some huge bit of information, then. Using my example, how is the business worth $14M if it's not making, say, $1M a year? If it's not making any money, wouldn't the value be much less? Maybe the current business value is very low, but the land is worth $14M because someone else could make more money with it. In that case, the wisest decision would be to sell it, use the proceeds to pay off the taxes and whatever liens are hanging around, and then invest the balance more productively. Say you have $10M left over after settling taxes and debts. That's still a huge windfall, and anyone living on that farm would never be poor again. Invested wisely, and that family never works a day in their life again. Hell, a risk-free 30 year US Treasury bond is paying in the neighborhood of 4.5% now. That windfall could be turned into a risk-free salary of $450,000/yr, with zero investing skills.

FrustratedMonky 2y ago
Sorry. don't have a good example with math. I think the issue is that in the 70's the cut off was lower, below 13M. And stocks/bonds were also not doing as well so the concept of selling and investing and living off that wasn't possible. And possibly a lot of farmers had loans, large debt. I'd need to find all the pre-inflation 70's examples. I just remember at the time the farmers were kind of stuck in a catch-22. Probably does not apply to todays farmers. But you are correct, with your numbers. If the land really is worth that much, they could sell and re-invest.
deleted 2y ago
[deleted]

Terr_ 2y ago

> The land is worth a lot but also has large notes on them. Assuming you mean debts/mortgages, those already get subtracted from the valuation of the estate [0] which means the farmers you're worried about are even further away from having to worry about the Estate Tax. > NOBODY would call them rich. Again, I think that get some clear estimates and go through the math, you'll see that "think of the poor farmers" is a myth promoted by certain non-farmers, where both of us would call them rich. [0] https://www.investopedia.com/terms/a/adjusted-gross-estate.asp https://www.investopedia.com/terms/a/adjusted-gross-estate.a...