Republicans claim estate tax hurts farmers, small businesses, but really it only affects the wealthy

Republican politicians have strongly voiced their support for ending the estate tax, saying it hurts farmers and small business owners, sometimes forcing them to sell the farm or business and denying them the opportunity to hand ownership down to their children, Warren Fisk reports for PolitiFact. But there is little evidence that supports those facts, and few families are wealthy enough to be bothered by the estate tax.

Republicans voted 233-3 to end estate tax; Democrats opposed it 176-7, Fisk writes. "The measure is expected to be filibustered by Senate Democrats, many of whom say the repeal of the tax—which brings in almost $22 billion a year—benefits only the wealthy." Republicans point to studies from 1998, 2006 and 2012 that say the estate tax is a burden for farmers and businesses, but all three reports lack any hard evidence.

"Today, the federal levy affects estates worth $5.43 million or more from individuals and at least $10.86 million from couples," Fisk writes. "The tax rate can be as high as 40 percent, although most estates pay considerably less because of deductions available to heirs. The average tax rate rate in 2013 was 16.6 percent, according to a computations of IRS data by the nonpartisan Urban-Brookings Tax Policy Center."

"The Joint Committee on Taxation estimated in March that 5,400 people will leave taxable estates this year—about one in every 500 people who dies—or two-tenths of one percent," Fisk writes. "The Tax Policy Center, in its 2013 study, came up with an even smaller number: It estimated 3,780 people would leave taxable estates that year. That was roughly one of every 660 people who died. Of those high-end estates, half had some farm or business assets."

"The researchers drilled down further to separate the estates of wealthy people with diverse portfolios from those whose holdings centered on a farm or business," Fisk writes. "They concluded that there were only 120 taxable estates in the nation where half of the value or more came from a single farm or business operation."

"Next, the researchers honed in on how many of those estates belonged to small family farmers and businessmen," Fisk writes. "So they narrowed their focus to taxable estates worth no more than $10 million with less than half of the assets held in a farm or business. Under that formula, the center concluded that about 20 small farms and businesses across the nation were added to federal estate tax rolls in 2013." (Read more)