Trump Plan Eliminates Estate Tax

Sep 29, 2017  | 4 min  | Ep4306

President Trump had another policy proposal this week, rolling out his vision of a new tax code. If adopted, farm country could reap the benefits.

Paul Yeager has more.  

President Donald Trump: “This is a once in a generation opportunity.”

The president’s $5 trillion plan would cut taxes for corporations, potentially for individuals and simplify the system while eliminating some policy closely watched in rural America.

President Donald Trump: “We want tax reform that is pro-growth, pro-jobs, pro-worker, pro- family, and, yes, tax reform that is pro-American.”

Details are scarce, leaving room for Congress to shape much of the plan. The GOP blueprint does increase the standard deductions to $12,000 for individuals and $24,000 for married couples -- most likely through the elimination of the personal exemption. However, the bottom tax rate would increase from 10 to 12 percent.

Sen. Charles Schumer, D - NY: “The top rate on the wealthiest comes down and the bottom rate of the working class families goes up. What kind of plan in this?”

One of the cuts proposed would eliminate the estate tax. Long known in rural America, it is viewed as the Death Tax by some and seen by critics as a boon to an already successful upper class.

President Donald Trump: “To protect millions of small businesses and the American farmer, we are finally ending the crushing, the horrible, the unfair estate tax.”

Currently, the gift tax exemption allows up to $5.49 million per individual to be left to heirs. After that, the rate of taxation is 40 percent.

Sen. Charles Schumer, D - NY: “Republicans are giving $269b to the richest .02 %. The president said he didn’t want to give tax breaks to the rich, then he should this afternoon denounce repeal of the estate tax, which goes exclusively to the rich.” 

In farm country, $5.49 million is the average value of 764 acres of Iowa farmland, which according to USDA is nearly twice the size of the average Iowa farm.

Iowa Senator Charles Grassley, a farmer who owns more than 600 acres in the Hawkeye State, sees the plan as a win for big cities, where small businesses create jobs, and for farmers.

Sen. Charles Grassley, R – IA: “I have a lot of people in my neighborhood that would fall into the category of having to pay the estate tax, and they worry about it. Is that worry legitimate? You have to ask them. But they feel strongly about living conservatively and getting an efficient operation and leaving that to future generations. That’s how family farms exists for the most part, is people of the next generation taking over.” 

Critics of the president’s proposal say farmers get used in the political play involving the Estate Tax as so few instances occur each year.

Budget hawks see the potential of increasing the federal deficit as another downfall.

Officials for the farm trade group National Cattlemen’s Beef Association, say member farmers and ranchers are small business owners who could benefit from comprehensive tax reform.

Danielle Beck, Director, Government Affairs, National Cattlemen’s Beef Association: "It’s important that the tax code work for them. The unique nature of farming and ranching operations. We’ll be fighting until the very end for full and permanent repeal of the Death Tax."

The nonpartisan Tax Policy Center says only 5,500 of the 3 million estates settled in 2017 would have to pay any taxes. And of that, only 80 would have to pay the estate tax. Back in 1977, 139,000 estates had to pay the tax, but lowering the rate and raising exemptions has changed the scope of the issue. When asked about any specific instances of heirs having to sell portions of farms to pay estate taxes, Grassley could not immediately cite a case.

For Market to Market, I’m Paul Yeager.


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