From an editorial in The Washington Post on Jul 24, 2005. pg. B.06
One of the chief arguments of those seeking permanent repeal of the estate tax is that it cruelly penalizes farmers and owners of small businesses whose heirs are forced to sell off their holdings to pay the tax. "In order to make sure our farms stay within our farming families, we need to get rid of the death tax once and for all," President Bush proclaimed in a speech last month to the Future Farmers of America.
This assertion, though, is more convenient myth than fact....A new study by the Congressional Budget Office examined estate tax returns filed by farmers and owners of small businesses in 1999 and 2000. The numbers that owed estate tax, the CBO found, were paltry. In 2000, for example, just 1,659 farm estates had taxes due.
But at that time the amount of money that could be passed on to heirs free of taxes was just half what it is now. With the current exemption level of $1.5 million, the CBO analysis found, only 300 farm estates in 2000 would have owed any tax at all.
At the even more generous exemption scheduled to take effect in 2009, $3.5 million, the ranks of those potentially hit hard by the tax would have dwindled even further; 65 farm estates would owe taxes.
In other words, the image of the grieving heir packing up his hoe as he trudges away from the family farm is just that -- a powerful image but not an accurate one.
See another story on this subject here.