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Ford Motor Co. Message Board

  • dzeeman5000 dzeeman5000 Nov 10, 2006 10:21 AM Flag

    A new dawn for America as the Democrats


    begin preparation for introducing legislation that is actually good for America and positive for the middle-class. Among the "positive" items are minimum wage increase, ethics and lobbying reform, healthcare programs and reducing the cost of the Medicare, part "D" that prohibited the bidding process on prescription drugs, written by the pharma industry, rolling back the tax cust for the wealthiest 1% of Americans, cutting out the tax breaks for the big oil companies, and instead of "stay the course" in iraq, a major change of direction. So, instead of the corruption, lies and benefits for the wealthiest and the biggest companies, the Democrats are proposing programs that help Americans, not hinder us.

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    • yeah,and u probably would vote for hillary too.

    • But you've actually hit upon one of the primary reasons to have an estate tax. Your farmer friend's property increased in value tremendously, not just due to his own hard work, but also because the local economy grew out toward his farm. Welcome or not, that kind of growth increase values, and in your friend's case, up to $20 million.

      As I pointed out earlier, if he were farming in Haiti, his farm wouldn't have increased in value at all. But it did. So why should his family reap the benefit of that increase without contributing back to the society that made such an increase possible? Assume like growth during his children's lifetime. Should they have a half-billion estate to pass on to their children tax free?

      And your friend managed to evade the tax anyway, for about $200K. I'd gladly pay $200K in exchange for a tax-free $20 million. Sorry, I don't feel badly for people like that. Most of us would like to get by without paying our fair share, but I don't think that's the way things should be run.

    • What in the hellare you smoking???

    • Illinois allows real estate assessments to be frozen for senior citizens. It's not quite as good as freezing the entire real estate tax amount, but it does help a lot.

      The pension problem is real. My wife is entitled to a $900 per month pension when she reaches 65, based on years of service at a company she was laid-off from in 1989. The pension isn't indexed for inflation, and over 40% of its buying power has already dissipated. By the time she reaches age 65 and starts to collect it, it will be worth about 1/4 of its 1989 buying power. Meanwhile, our real estate taxes have doubled over the last 9 years, strictly as a result of increased assessments. We aren't eligible for the "senior freeze" and won't be for several years. I just hope I can afford to stay in the house long enough to qualify for the assessment freeze.


    • Square, you're partially correct. There was an increase in the exemption on its way toward total elimination. However, I believe the $650K exemption was raised to $750 back in the 1990s, and then to $1 million in 2001 (when the total elimination legislation was passed). It gradually increases through 2010, but in 2011 returns back to $1 million exemption.

      You should check this out:

      I recall that when the Republicans were debating the repeal, they used the same "small family farm" argument you are using, and when challenged, they could not come up with a single instance where a small family farm had to be sold to pay the estate tax.

      Note: "Tax Relief Provided to Farms and Small Businesses

      Supporters of estate tax repeal have argued that the tax should be eliminated because of its adverse effects on small businesses and farmers. A recent Congressional Budget Office study is helpful in evaluating these claims.[3] The study found that few farms and small businesses are affected by the estate tax, and it exploded the myth that family farms and businesses must be sold to pay the tax."

      You: "How do you come up with that idea? A farm whose land is worth $2.5 million but which has an outstanding $500K mortgage has a net real estate value of $2 million."

      That's true. I misspoke. They do not have to be debt free, but they have to have a net value greater than the exemption.

      Chuck Rangel is one man. While I think he will do anything to overturn the Republican law that basically amounted to a big gift to billionaires, I think most Democrats in Congress realize that $1 million net is too low. They're already attacking the Alternative Minimum Tax, and that affects the middle class far more than the estate tax does.

    • More on the inheritance tax issue--Charlie, a late friend of mine, owned a greenhouse and hobby shop in the Chicago suburbs. Two of his children were very interested in inheriting and continuing to run the business. This presented a problem since the business sits on 25 acres adjacent to a suburb, and the township assessor wanted to reassess the land as "undeveloped prime residential property" worth about $800,000 per acre. As long as Charlie was alive and using the land for an "agricultural purpose" (greenhouses raising and selling bedding plants count), state law required that the land be assessed as farmland, but when he and his wife died the estate would owe three years' taxes on the land at its "residential property" assessment and the estate would be valued based on the "residential property" value of the land. Charlie was in his 60s and in declining health when he realized what would happen if he and his wife died without taking very specific action to minimize the inheritance tax and real estate tax which would become due on his death or his wife's. It took him 10 years and about $200,000 in legal fees, but he managed to transfer ownership of the business and the land it sat on to his children, while he and his wife became mere employees of the business (the children really did take over the running of the business and are doing well at it, although they decided to close the hobby shop). Charlie died last May, and his wife continues as an employee of the business, living in the residence on the property. Fortunately, the greenhouse generated enough free cash that Charlie was able to pay those legal fees and get ownership transferred before his death. If he'd been farming, he probably would'nt have been able to manage the transfer and the location would be sprouting half-built condos now.


    • Tjoe,

      The increases in the inheritance tax exemption that you mentioned were in the same law that eliminated inheritance taxes completely in 2010--the law was written to gradually phase out the inheritance tax rather than cancelling it all at once. All of its provisions become null and void as of January 1, 2011, and the old $650,000 exemption again takes effect. Rep. Rangel has already publicly stated that he will NOT allow any tax-reduction legislation out of the Ways and Means committee as long as he is Chairman of that committee--he intends to put both the income tax and the inheritance tax back to their pre-2001 levels by letting the existing legislation expire without being extended or replaced.

      As regards "selling off to the nearest developer", that only works if the farm in question is close to a major metropolitan area. In such areas, the price developers are willing to pay frequently exceeds $800,000 per acre so I'm not surprised that people who aren't REALLY interested in farming would sell out, but most farms aren't located close enough to expanding cities for developers to be active. In the Northeast Corridor, yes, farmers usually have developers camped at the end of the driveway. That isn't true in most of the South outside Florida, in the Midwest outside a 50-mile radius around Chicago, St. Louis, and Detroit, or anywhere in the Plains states. It isn't generally true in the Pacific Northwest, either.

      Most farm families won't get caught "having to sell the farm to pay inheritance tax" because most farmers are married and after the death of a spouse the survivor gets "good" legal advice to manage an unhurried sale for top dollar rather than have the IRS breathing down the necks of the next generation after his/her death. Some farms are sold to agribusinesses, others to neighboring farmers, it just depends who's interested and has (or can raise) the money.

      You: "In order for that farm to have any estate tax at all, it would have to be 100% debt free (which I've never seen, and I come from a farming family)."

      How do you come up with that idea? A farm whose land is worth $2.5 million but which has an outstanding $500K mortgage has a net real estate value of $2 million. The estimated value of unharvested standing crops at the time of the owner's death is added into the value of the estate, as are all securities, bank accounts, vehicles, furniture, and even clothes in the closet. It has long been true that farmers are "land rich and money poor"--a very bad situation to be in at inheritance tax time. Sure, some farmers set up trusts and others incorporate in order to avoid taxes, but the cost of lawyers' fees to set up something of that sort and the record-keeping necessary to comply with ever-changing Federal laws will dissuade many of them from doing so.

      Maybe changing the inheritance exemption to $10 million would do the job, but given Rep. Rangel's public statements I will be surprised if any bill making that change gets out of Ways and Means as long as he's chairman.


    • Can't totally disagree with you, but at the end of the day, average life span is as much a factor as minimum wage. Your one example was an 80% reduction in buying power over a 40 or 60 year time frame. Do you really think it was ever imagined people would live long enough to be retired that long?

      I am hugely in favor of freezing retirees property tax!!

    • 3. I have proposed to the local county assessor and to state legislators that upon retirement, the assessment to the residence to retirees be frozen. This seems almost reasonable along with a homestead exemption. Property assessments has been growing at a much faster rate than COL.
      1. True, at the time of retirement, 40 years ago, people you refer to were making double the minimum wage of $160/month, I was one of those people, a lot of retirees received less than $200/month retirement and they are still receiving this paltry amount. MW now over $900/month. Doesn't look too good to me for retirees on fixed income. MW kills these people.

    • 1) Social Security is considered fixed income. Since you are not specific in the group that you refer to, I can only assume you mean those receiving company pensions and those collecting on their 401k or annuity programs. Keep in mind, that most people that are drawing on these programs did not make minimum wage when they were working, as a result, they should be receiving quite a bit more then what Social Security pays.

      2) At a minimum, look at it this way, if they have to be a greeter at Wal-Mart to make ends meet, at least we have provided them with a fairer wage.

      3) Not that I really want to open this box of worms, but one thing that I would like to see, is a flat property tax for retirees that have paid off their homes. One of my true pet peeves is Grandma's house was paid off 15 years ago, but because she is on fixed income and property tax keeps going up she has to leave her home! If somebody busts their ass to buy and pay off a home then retires, they shouldn't have to give up THEIR HOME because their fixed income can't pay the tax.

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