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CRS analysis reconfirms findings that few farm assets subject to estate tax.

Farm assets accounted for only 3.25 percent of taxable estates, and business assets accounted for fewer than 14 percent during 2009, according to a Congressional Research Service analysis of the data.

The report's author, Stephen Maguire, said there is a perceived need to provide the heirs of family farms and businesses with a break from estate taxes and such businesses are often used as the argument for permanently repealing or modifying the current tax system. However, he noted, that because farm assets and business assets represent a relatively small share of total taxable estate value, "repeal or modification of the estate tax would benefit more estates with a variety of different asset types."

Estate tax opponents typically argue that the tax interferes with economic efficiency, hurts savings and wealth, and is a tax on income that has already been taxed while the individual was alive. But Maguire points out that there are other views as well, including a perspective that there needs to be some type of estate tax to ensure that capital gains that have accumulated over time are taxed. Supporters of the estate tax also argue that family business assets and family farm assets should not be given special preferences in the tax code, he wrote.

The report said there were approximately 2.43 million deaths in 2008 of people 25 and older with only 0.6 percent incurring estate and gift tax liability in returns filed during 2009. CRS said only 1,846 decedents with taxable estates included farm assets, accounting for 0.08 percent of all deaths.

CRS said the primary reason for the low number of filers relative to the number of deaths in 2008 was the high gross estate value filing threshold, which was $2 million.

"This makes the estate tax a relatively progressive tax source," Maguire said, adding that taxable estates worth more than $10 million accounted for 11.2 percent of total taxable estates, but yielded 61 percent of all estate tax revenue.

CRS also reviewed the 2010 estate tax returns, but noted that the data reflect estates from individuals who died prior to 2010. The report cautioned against comparisons of some of the farm asset numbers since the expiration of the estate tax for 2010 means there were deaths in which no returns were required to be filed.
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Publication:The Food & Fiber Letter
Date:Apr 16, 2012
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