Guest column: Estate tax doesn’t impact farmers and ranchers

Doug Sombke President
South Dakota Farmers Union

Many of us relate Christmas time with hope, truth, joy and love for one another.

Lately, in our nation’s capital, especially on Capitol Hill, truth and love for one another seems hard to come by.

One topic filled with misleading information and half truths is tax reform. As I write this on Dec. 5, 2017, this bill is headed to conference committee to work out the differences between the House and Senate versions.

Coming to a compromise on some differences will be like flipping a coin to determine what to do and others will be like setting a thermostat in you home to find the comfort zone.

Whether Republican or Democrat, most agree that tax reform and simplification is necessary. However, as is often the case, those supporting a piece of legislation overstate their talking points.

As a farmer, I felt that I had to respond to politicians who use farmers, like you and me, as the reason why the estate tax should be eliminated.

The fact of the matter is, estate tax impacts very few family farmers and ranchers in South Dakota, or in any state for that matter.

I was disappointed when I listened to the political talking points used to sell the latest House of Representatives and Senate tax reform bills, including those from Rep. Kristi Noem and Sen. John Thune, who indicated through their comments that the estate tax places a tremendous burden on the average family farmer or rancher.

This just is not the case.

At least Sen. Rounds spoke the truth about the estate tax even though he voted for the bill.

Repealing the estate tax is one of those comfort zone differences between the two bills.

However, seeing Sen. Thune and Rep. Noem using family farmers as pawns to gain Manhattan billionaires and large multinational corporations huge tax breaks for their heirs is a bridge too far.

Their words and statistics got me wondering what the IRS statistics would be for South Dakota. Below is what I found.

Given the exemptions of nearly $5.5 million per person and almost $11 million for a couple, the vast majority of estates are not affected by the so called “death tax.”

Last year, according to the IRS, only 198 total estates were required to pay a total tax of $13,905.00 for farm and small businesses in South Dakota.

Comparing that to 14,205 individuals who paid $46,385.00 in federal excise tax, I’d suggest Thune and Noem are concentrating on the wrong tax for an exemption.

So then, why did the Senate and House just pass bills that raise taxes on the middle class, while at the same time say they were trying to help farmers by doubling the estate tax threshold from about $5.5 million to $11 million for individuals, and from $11 million to $22 million for a couple? And, after 10 years the tax is eliminated.

This wasn’t to protect farmers. Using farmers as a political pawn to help big businesses and billionaires doesn’t sit well with the South Dakotans I know.

Looking through the smoke and mirrors, we can see South Dakota’s senior senator and lone house member helped pass tax bills very detrimental to middle-class South Dakotans, including farmers. This tax bill gives massive handouts to the wealthier Americans, with few benefits for workers and retirees.

By 2027, half of the benefits will go to the top 1 percent. According to the nonpartisan Institute for Taxation and Economic Policy, this tax bill allows for $25 billion in Medicare cuts while increasing our national debt by $1.5 trillion.

This tax bill has no guarantee that the plan will return even $1 trillion in revenue to offset the increase in debt.

Are these our priorities for tax reform?

South Dakota’s farmers, ranchers and citizens deserve real reform that simplifies the tax code, eliminates loopholes, makes it fairer and puts money back in the pockets of middle-class families. But instead, we got a false sales pitch about the estate tax to sell a bill by all account to be a tax hike for many hardworking South Dakotans.

Christmas time is a time for hope, truth, joy and love — none of which are included in the tax reform bills passed by the House and Senate.

The truth is, we can do better. And, our national representatives need to do better!

Merry Christmas and God bless all you do.

Doug Sombke is president of the South Dakota Farmers Union.