A couple weeks ago, the Congressional Budget Office (CBO) released a report shooting down a longtime Rural Legend — and oft-time Republican talking point — that impecunious farm families often have to sell their farms to pay the estate tax when the senior farmer dies. According to the New York Times, the CBO found that “The number of farms on which estate tax is even 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.” More importantly, the Times reported that of those 300, “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 CBO arrived at its numbers by analyzing 2000 tax records under current law.)
Long parroted by anti-tax politicians and lobbyists, the Rural Legend has played its part in many elections and Congressional battles. It has also had gotten its fair share of print, usually in editorials arguing for estate tax repeal. And, despite the recent CBO findings, the Legend is still wreaking havoc. The latest victims are the readers of the Daily News — a Jacksonville, North Carolina newspaper owned by Freedom Communications.
A Sunday editorial in the Daily News backed the president’s call to permanently repeal the estate tax, characterizing the tax as “one of the worst taxes ever.”
The writer stated that according to David Keating, executive director of the Club for Growth — which the editorial describes as a free-market group — the estate tax “especially hits hard families that own property-intensive businesses, such as farms, which have much invested in barns, land and equipment.” Furthermore, “The tax often forces the family to sell a farm that has been owned for generations.”
We called the Daily News to find out more, because most everything we’ve read, especially that CBO report from earlier this month, suggests otherwise — that is, the estate tax does not often force families to sell off the farm to pay taxes. We spoke to J.B. Thomas, the Daily News editorial page editor, who mumbled something about passing our query on to the publisher, and then never got back to us.
Freedom Communications owns a number of other papers, and it turns out that this editorial, in various forms, has made its way from one editorial page to another. Not only did the Daily News run it, the Odessa (Tex.) American printed it on July 1 and the Colorado Springs Gazette published it on June 28. CJR Daily tracked the original editorial to the Orange County Register where we found it was authored by Register editorial writer John Seiler.
We reached Seiler yesterday afternoon and asked him to supply evidence to support his claim that “The tax often forces the family to sell a farm that has been owned for generations.” First, we asked, had he ever talked to anyone that had been put in this position? No, he told us. (He later forwarded us this article concerning a family that had to sell its farm because of taxes.)
What about specific research about the estate tax and its effect on farmers? He replied, “I’ve written about this for a long time,” suggesting that “numerous studies over the years” have documented the loss of family farms to estate taxes.
He then cited various congressional bills designed to fix the problem, none of which offered evidence that the problem actually exists.
Seiler said he hadn’t seen the recent CBO report — quite likely, given that it was released after his June 27 column.
But he promised to get back to us after more research, and he did. After talking to David Keating, executive director of the free-market Club for Growth, cited in his original editorial, Seiler argued that the CBO report ignores the fact that family farmers have to prepare to pay for the estate tax by funneling money into liquid accounts — money that would otherwise be spent investing in the farm. This, he argued, provides an unfair advantage to corporate farms. Further, he noted, the estate taxes of individual states can provide an additional burden to the federal taxes examined by the CBO.
Does he continue to believe it’s accurate to state that families “often” have to sell family farms because of the estate tax?
“Yeah, I think so,” he replied again, reiterating that he’d been writing about this topic for years and has heard reports of it happening during that time, although he admitted that there “doesn’t seem to be a study on [the number of people forced to sell] specifically.”