“Eat the Rich?” But Save the Family Farm First
“Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow inthe streets of every city in the country.” - William Jennings Bryan
Congressional Democrats have framed the battle over tax policy as a fight on behalf of the poor and the middle class against “the rich.” Lost amid the protesters’ claxon cry of “eat the rich” is a rational examination of what it means – exactly – to be “rich” in rural America.
The Democrats’ understanding of what it means to be “rich” is about as shallow as the image of a bespectacled ‘monopoly man’ with his dinner jacket, top hat and jaunty monocle. They refuse to concede that anyone with a net worth that exceeds a $1 million can legitimately be entitled to tax cuts based on hardship, much less sound economic policy. According to President Obama, a struggling family farmer with a net worth of $1 million is as “rich” – for the purpose of justifying the drastic tax increases that will automatically go into effect on January 1st – as multi-billionaire Warren Buffet. If recent news reports are accurate, House Speaker John Bohner is ready to concede the point.
In reality, Warren Buffet’s secretary likely has more cash liquidity than many ‘millionaire’ family farmers. A 2005 report on the “Effects of the Federal Estate Tax on Farms and Small Businesses,” published by the Congressional Budget Office, found that nearly 10% of family farmers in the United States did not have enough liquid cash to satisfy Federal estate tax debts.
“The estate tax is a big deal for farmers because their assets are tied up in the land,” Megan Foster, executive director of California’s Yuba-Sutter Farm Bureau, told a reporter from the Yuba City Appeal-Democrat. “The next generation doesn’t have liquidity because the value of the estate is in the family farm. So, when the tax bill comes, they don’t have the cash and are often forced to sell off some if not all of their land.” The Yuba-Sutter Farm Bureau, and other farm bureaus across the country, have started to offer free estate planning seminars in an effort to save as many family farms as possible from the nation’s impending ‘fiscal cliff’ dive.
In 2010 Congress raised the estate tax exemption to $5 million, but imposed an automatic termination date of December 31sr, 2012. When the New Year’s ball drops in Times Square on December 31st, the Federal estate tax exemption will automatically plummet from its current $5 million level to the 2001 exemption level of $1 million. Everything above that amount will be taxed at 55%, a 20% increase from the current 35% top tax rate. Congressional Republicans are correct that such a sudden and dramatic rise in the top tax rate, with a simultaneous drop in the estate tax exemption, will have a devastating impact on cash-starved family farmers
Congressional Democrats dismiss these dire warnings. But the underlying facts that drive this debate are based on the daily experiences and struggles of farm communities throughout the United States. They are the ones who have had to live – and die – with confiscatory tax burdens as they watch the tradition of family farming disappear like topsoil in a dust storm.
Democrats simply do not understand just how quickly a family farm worth millions of dollars can be lost when it is burdened by tax debt, crushing loan payments, the falling price of farm goods, rising transportation costs and the cost of complying with government regulations. The Democrats’ calls for ‘tax fairness’ have more in common with Stalin’s dystopic forced collectivism than with the Jeffersonian ideal of an agrarian democracy based on family farms and freedom. If Congress doesn’t act to drive a stake in the heart of the ‘death tax,’ Americans may wake up one day and find that they have nothing left to eat but “the rich.”