The Republicans and Democrats have squared off over the estate tax. Congress passed a bill calling for its gradual elimination, but President Clinton vetoed it. It’s become a subplot of the presidential race.
While a lot hinges on the election, one thing is certain,changes in the estate tax are expected no matter which party wins.
While Gore has said that the estate tax should continue, he’s also in favor of raising the tax exemption from $2.6 million to $5 million for each family.
“Most small-business owners and family farmers already pay no estate tax on their properties,” reads a statement on Gore’s campaign Web site. “Gore’s plan would eliminate estate taxes for more than 90% of family farms that currently do pay estate taxes, and more than 70% of small businesses that currently pay estate taxes, and provide some estate tax relief for all small businesses and family farms.”
If George W. Bush wins, it’s widely expected that he’ll sign a version of the bill similar to what Congress passed earlier this year,the gradual elimination of the estate tax in the next 10 years.
Republicans oppose the estate tax for a variety of reasons. They contend the estate tax is double taxation. It harms small businesses by causing them to sell assets to pay taxes and discourages parents from passing their companies on to their children. They also said it’s counterproductive, as people try to hide their estates and thus put their productive capital into non-productive uses.
Ken Knott, grandson of Knott’s Berry Farm founders Walter and Cordelia Knott, told the Business Journal he thinks the current estate tax rate is too high, though he acknowledged that others believe it is fair.
Knott said he and his wife, who are ranchers in Oregon, have many friends who have had to sell their holdings because they couldn’t afford the estate taxes.
“Many farm people are older and the young people don’t have the capability of buying the land at today’s prices,” he said. “The banks won’t loan (the amounts needed) based on the risks in farming.” n
