Last month, Republican Senate candidate Carly Fiorina (R) said, “let me propose something that may seem crazy to you: you don’t need to pay for tax cuts. They pay for themselves, if they are targeted, because they create jobs.” That is, in fact, crazy, but it’s not the only tax bamboozling that Fiorina is trying to pull.
Last week, Fiorina made a two campaign stops — one at Grimmway Farms in Arvin, CA, and another at the Tri-Boro Fruit Company — where she fearmongered about the currently expired estate tax while “flanked by supportive local farmers.” “If we do nothing the death tax will go from 0 percent today to 55 percent on January first,” said Fiorina who favors a full estate tax repeal.
One of the farmers with whom Fiorina appeared is evidently worried that “his children would one day have to sell off property that’s been in the family for generations” were the estate tax to be reinstated. Not knowing anything about that particular farm, it’s hard to say what its potential estate tax liability might be, but the fact is that exceedingly few farmers in the country ever have to pay the estate tax. Fiorina is hiding behind them in order to push a tax cuts that will overwhelmingly benefit the already ultra-wealthy.
President Obama has proposed reinstating the estate tax at the 2009 level of 45 percent with a $3.5 million exemption (so $3.5 million can be handed on entirely tax free). According to estimates by the Tax Policy Center only about 110 small businesses or family farms in the entire country could conceivably be affected by the estate tax at that level. And “virtually none” would have to go through the doomsday scenario of selling off parts of the farm itself in order to pay:
A Congressional Budget Office study found that all but a handful of the farm estates that would owe any tax under the 2009 parameters would have sufficient liquid assets on hand (such as bank accounts, stocks, and bonds) to pay the tax without having to touch the farm or business. And those very few small business and farm estates that might conceivably face a liquidity problem would have other options — such as spreading their payments over a 14-year period — that would allow them to pay the tax without selling off any of the business or farm assets.
In fact, in 2001, when the estate tax was much higher than it was for the rest of the last decade, the American Farm Bureau “could not cite a single example of a farm lost because of estate taxes.” Iowa State University Economist Neil Harl “said he had searched far and wide but had never found a case in which a farm was lost because of estate taxes.” “It’s a myth,” he said.
Currently, almost two-thirds of estate tax revenue comes from estates worth more than $20 million. In addition to benefiting only the super-wealthy, repealing the estate tax entirely would cost $784 billion over ten years.