Farmers and estate taxes

Protecting farmers is an important part of the rhetoric that has been used to promote emasculating or entirely repealing federal estate taxes. David Cay Johnston reported in the New York Times yesterday:

The number of farms on which estate tax is owed when the owners die has fallen by 82 percent since 2000, to just 300 farms, as Congress has more than doubled the threshold at which the tax applies, the Congressional Budget Office said in a report released last week.

All but 27 farmers left enough liquid assets to pay taxes owed, the budget office found, although it hinted that the actual number might be zero. The study examined how much in cash, stocks and bonds these farmers left to pay estate taxes, but the report noted that no data existed on how much life insurance the farmers had put into trusts. Virtually all wealthy farmers own life insurance in trusts, say estate tax lawyers who specialize in working with farmers.

These findings come as the Senate is poised to vote this month on repeal of the estate tax. Advocates of repeal have begun showing commercials criticizing senators who oppose repeal, like Maria Cantwell, Democrat of Washington. Many of the criticisms focus on a supposed threat to family farms.

The link to the Congressional Budget Office report is here (.pdf). Thanks to Jonathan Weiler of the Gadflyer weblog for the link. Weiler challenges readers to uncover just one farmer nationwide whose farm was lost to his or her descendents due to the estate tax.

Update (7/19/2005): fixed typo in Johnston's name.