How The Death Tax Kills Small Businesses, Communities—And Civil Society

Think that the "Death Tax" is an engine for redistributing wealth from the wealthy to the needy? Not so. A more accurate description would be that it redistrubutes wealth from small communities to large corporations.

This isn't to say that large super-chains like Wal-Mart and Target are to blame. No, far from it. The large corporations are simply taking advantage of the opportunities that the Death Tax makes available to them.

When the owner of a business or farm whose valuation is over the Death Tax threshold dies, those who stand to inherit the estate will have to pay the Death Tax. Now, if the deceased did not leave enough cash reserves to pay off the Death Tax, the heirs will have to come up with the money. That usually means selling off land or assets and most often, a large corporation will be there to make the purchase.

But it isn't only the business or farm that suffers. The community around which the business or farm existed also suffers, especially now since the new owner's have no vested interest in the local community the way a family-owned business does.

Writing for the Heritage Foundation, Patrick Fagan, Ph.D., illustrates this witrh crystal clear reasoning:

All across America, the day-to-day richness of Americans’ way of life is evident among families who live in tight-knit towns and small communities. Com­munities are formed through an intricate web of con­nections. The typical web-building process is familiar: Children gather at a local swimming pool or join a Boys & Girls Club. Their parents become acquainted. Parents and children form friendships and find their lives intersecting in a widening variety of places—at church, at school and local civic organizations, on ath­letic teams, and through charitable projects. They visit in one another’s homes, share their concerns about their children’s schools, and render mutual aid and moral support in times of difficulty. Through such interactions, individuals and families spontaneously knit the fabric of a community. Then the boy mar­ries the girl and it all starts over again. But community is not an inevitable result even when people live in close proximity to each other. The associations that form a community are like an ecosystem, where all the complex interactions depend on a few sources of sustenance: air, water, sunlight. Degrade one of those sources, and the eco­system is vulnerable to systemic breakdown. So, too, with communities. By undermining a primary source of sustenance for communities, the small business, the “death tax” (the federal estate tax levied on individuals, including owners of small companies, after their death) is a direct assault on a community’s ecosystem. In any typ­ical community, small businesses are not external sources of nurturance, like sunlight cast on an ecosys­tem from afar. They are integral parts of—and active participants in—a community. As such, they generate some of the most critical forces that knit communities together. These crucial economic resources are often destroyed by death taxes. ... Playgrounds, senior centers, volunteer organiza­tions—are all spaces within which people interact to form community. These spaces are not optional; a community cannot exist without them. In threatening the source of their support, the death tax is the Grim Reaper that can gut small communities by uprooting people’s livelihoods, decimating charity flow, cutting down young entrepreneurial talent, while in the pro­cess robbing small-town America and city neighbor­hoods of much of their civil society underpinnings.

While the Obama administration deems many businesses (usually those with large bodies of Union employees) as "too big to fail" they have yet to declare any community as "too small to steam roll."

You can access the complete article on-line here:

How The Death Tax Kills Small Businesses, Communities—And Civil Society
Patrick Fagan
Heritage Foundation
July 26, 2010

Obama Wants Renewed Assault Against Family-Owned Farms And Small Businesses: The Death Tax

One thing you can say about Barack Obama is that he never misses a chance to screw the American people with new taxes. And, although he claims to be the friend of small businesses and family-owned farms, he wants to re-apply the tax that has done more damage to Mom & Pop businesses and small farms than any other tax: The Death Tax.

From Fox News:

For those dying to take advantage of next year's zero percent federal "death tax," they may want to kill those plans. President Obama's budget keeps the estate tax at its 2009 level, which means the government gets 45 percent of a dead person's estate valued over $3.5 million dollars or $7 million for a couple. Republicans argue this tax doesn't just strike the wealthy. "It destroys a lot of small businesses and a lot of family farms and ranches in America," said Sen. John Ensign, R-Nev. "People who aren't wealthy, who may have built up value in land over generations and many family farms find themselves in situations where they've got to sell the farm in order the pay the taxes," said House Minority Leader John Boehner, R-Ohio. In 2001 and 2003, Republicans helped push through President Bush's tax cuts that lowered the estate tax from 55 percent to 45 percent this year and would have eliminated them next year.

To understand how this works, read the following example:

Suppose a man started his own small business or purchased a farm back in the 50's or 60's. He bought property and built up his trade over the years. He bought a house and some land and paid it off over time. When he originally purchased his property, it was a total value of, say, $50,000.

Then he dies in 2009 leaving his business (or farm) and property to his family survivors. Today the business and property (or farmland) is worth over $5,000,000. If the Death Tax was 45%, then his survivors would owe $2,250,000 in taxes as a result. If he left only $20,000 in his bank account, his survivors would have to come up with $2,230,000 to pay off the tax or the government would come in and take everything leaving them with nothing.

What is the family going to do to raise $2,230,000? They sell the business (or farm) and the property, usually to a major corporation who developes the land for commercial or residential use.

The small business or farm is then lost forever, all due to a very unfair tax that the Democrats use to supposedly "stick it" to the rich, but end up sticking it to the middle class instead.

You can access the complete article on-line here:

Obama's Budget Resurrects 'Death Tax'
Molly Hennenberg
Fox News
April 1, 2009

Excellent On-Line Essay: Blue-State Bailout Blues

By Jay Henderson over at American Sentinel.

So, which states are the first in line to ask for federal bailouts? Those states with the largest entitlement spending programs. They are New York, California, Massachusetts, New Jersey and Illinois.

From Jay's on-line essay:

There is a dangerous tipping point in politics. When 50.1% of the voters pay no taxes but expect and rely on "entitlements" from the government, then they will tax to infinity the remaining 49.9% of the polity. The Blue States now begging for bailouts give us a good look at what happens as that tipping point approaches. The rush for Federal bailout bucks began in November, led by California and New York. In early January, Democratic governors from Wisconsin, Massachusetts, New Jersey, New York and Ohio pitched their case to the Obama transition team, proposing a $1 trillion bailout of state governments. The needy Blue States of Massachusetts, New York, New Jersey, Illinois and California provided 134 Obama electoral votes last November - - more than half of his total. Other states on the bailout list include Michigan, Ohio, and Wisconsin, 47 more Democratic electoral votes. The political pressure on the Obama administration is obvious.

Your tax dollars, money you need to take care of your own family, are going to go for paying off political allies and propping up socialist entitlement programs that are destined to bankrupt those who fund them, no matter how many ways they are taxed.

But of interesting note here is that those states are also among the wealthiest in terms of per capita income:

Ironically, the governors travelling to Washington with begging bowls represent some of the wealthiest states in the U.S. Measured in terms of per capita income, they include New Jersey (ranked number 2), Massachusetts (ranked number 3), New York (number 4), California (number 7), and Illinois (number 16), as of 2007 statistics. Per Capita Personal Income By State. How can this be? Well, these same states are at the forefront of "entitlement" spending and social engineering projects.

Finally:

While Red State America, sustained by blue collar, working class, and small business taxpayers, is called upon to bail out the wealthy but profligate Blues - - the Congressional Democrats and the Obama Administration are planning to expand or adopt the same kinds of "entitlement" spending programs and social engineering projects that are breaking the backs of Blue State taxpayers. Because they work so well, right? This is a chilling insight into our national future - - if we don't derail the Obamacrat train.

So, who is going to bailout the small businesses, blue-collar workers and the working class when the U.S. government bankrupts itself by wasting trillions of dollars on the same foolish programs that bankrupted the states that are looking for bailout dollars?

You can access the complete article on-line here:

Blue-State Bailout Blues
Jay Henderson
American Sentinel
February 4, 2009

Other links here:

Next Federal Bailout May Go To States; Democratic Governors Seek $1 Trillion
FoxNews.com
January 3, 2009

Facing Shortfalls, States Seek Emergency Aid From Washington
Keith B. Richburg and Ashley Surdin
Washington Post
November 16, 2008

Local Zeroes: Cities And States Are Facing Big Budget Deficits
The Economist
November 13, 2008

A Letter To Virginia Senators Warner And Webb, And Representative Wolf

Another bailout? Another failure in the works? Why won't Congress learn?

If you are from Virginia, feel free to copy this letter and send it in:

Dear [Congressional Representative], I am writing this letter to ask you to vote “Nay” on the proposed bailout of the Detroit “Big Three” automakers. While it is true that the American economy has been in a recession since last December, it is also true that we cannot kick-start it by placing yet another burden on the children and grand-children of the American taxpayer, especially a burden of a program that is doomed to failure. As a case in point, I show you the $700 billion bailout of Wall Street that was supposed to fend off a market crash. Not only was that bailout a complete and total failure, but it saddled a $905 billion debt on our children and grand-children. And even beyond that, the pork that existed in that bill was nothing short of unpardonable. After all, those toy wooden arrows, wheat research grants and subsidies for Puerto Rican rum didn’t do a damn thing to shore up the markets. And now, the Federal Government wants to make the same mistake again, only this time with Detroit. There comes a time when you simply must let a business fail. Detroit has reached that time. The legacy costs they have incurred over the years are too much for them to overcome and certainly not worthy of the hard-earned dollars that the American taxpayer will be forced into paying for them. As a case in point for this, I show you the Jobs Bank program that the United Auto Workers negotiated with the Big Three. In this program, workers are literally paid not to work. How long can any business maintain such a ridiculous policy? It is true that there is talk of “suspending” this program, but that won’t help since it means the program could come back and force more legacy cost on the automakers. It needs to be killed completely along with several other concessions to the UAW that have contributed to the legacy costs that are right now killing Detroit. The best way to fix the problem is to allow the Big Three to go into Chapter 11 and re-organize. This is the most viable option as is evidenced by the other big automakers in the United States who have plants in California, Tennessee and South Carolina. None of them are in trouble nor are they asking for any kind of bailout nor are they beholden to any labor unions. If the Big Three want to survive, they should look to Toyota, Honda and BMW as models for restructuring. One last point I want to make. Small businesses all over Virginia are in danger of failing due to the bad economy. Hairdressers are losing business because people don't have the money to get their hair done as often. Garages are losing business because people are putting off auto repair for as long as possible. Painters, plumbers and carpenters are losing business because people are putting off home repairs as long as possible. But despite the fact that small businesses here in Virginia are in danger of failing, no one has been proposing a government bailout for us. Please apply that same standard to Detroit. Thank you.

Myth Vs. Fact: The Obama Infomercial Lies To Taxpayers About Obama Tax Hike

And the hits just keep on coming! Americans For Tax Reform have found a few "easter eggs" in the 30 minute Barack Obama Infomercial too. Let's see what they have to say:

Myth: “As president, here’s what I’ll do. Cut taxes for every working family making less than $200,000 a year. Give businesses a tax credit for every new employee that they hire right here in the US over the next two years, and eliminate tax breaks for companies that ship jobs overseas.” Fact: According to IRS data, 33% of families don’t even have an income tax liability, so it’s impossible to cut their income taxes. Also, Obama’s summary conveniently leaves out the fact that he would bring the small business tax rate to over 50 percent and would hike the capital gains and dividends tax at a time of market turmoil. His plan is a massive tax hike.

And somewhere in there, Obama and his followers have somehow convinced themselves that taking even more money out of the American economy is going to lead to some sort of prosperity. It won't. It will lead to an even worse economic downturn, just as Jimmy Carter's misguided economic policies did from 1977 onward.

Myth: (OH Gov. Ted Strickland speaking): “Think of this. Barack Obama is going to be a Democrat in the presidency who actually cuts taxes. But he’s gonna cut taxes for the people who really need a tax cut. He’s gonna cut taxes for the struggling families. And he’s gonna do that while holding accountable those companies that take advantage of tax breaks in order to send jobs offshore and to other countries.” Fact: Obama will raise taxes by over $1 trillion by hiking the small business tax rates, the Social Security tax rate, and the nest egg tax rates on capital gains and dividends. Also, the reason companies move overseas is because our taxes are already too high. How does raising their taxes do anything but make this problem worse?

Many workers (myself included) already lost money in our 401k accounts because of the recent crisis on Wall Street. Taxing our retirement accounts is only going to make that problem worse and devalue our 401k's even further. It will certainly encourage me to move my money off-shore where the socialists won't be able to get to it.

Myth: (VA Gov. Tim Kaine) “Barack has looked at the small business side of the American economy and says ‘Look, that’s where most innovation and entrepreneurship is. Let’s give them the rocket fuel to really accelerate rather than giving tax cuts to the ExxonMobils or the big oil companies that need not one ounce of help from the government to be very successful.’” Fact: Under Obama’s tax hike, the tax rate on two-thirds of small business profits will exceed 50 percent for the first time since Jimmy Carter. If that’s rocket fuel, the U.S. economy won’t ever get off the launch pad. Also, raising taxes on energy companies won’t do anything except make energy more expensive for consumers.

Here is another economic fact that simply isn't registering with the Democrats. Taxes get passed on to consumer in the form of a higher price for the product or service. Higher taxes mean even higher prices. So, if the socialists raise taxes on companies that produce energy, the price we consumers pay is also going to go up.

Myth: “I’ve offered spending cuts above and beyond their cost” Fact: We can’t say it any better than the AP: “Obama's assertion that "I've offered spending cuts above and beyond" the expense of his promises is accepted only by his partisans. His vow to save money by ‘eliminating programs that don't work’ masks his failure throughout the campaign to specify what those programs are—beyond the withdrawal of troops from Iraq.”

And that's true. Apart from cuts in defense spending, I can't think of anything Obama has promised to cut. Certainly not any bottomless pit social programs.

Myth: “So I’m not worried about CEO’s, I’m not worried about corporate lobbyists, I’m not worried about the drug companies or the oil companies or the insurance companies--they’ll be fine, they’re going to look out for themselves. I’m worried about the couple that’s trying to figure out how they’re going to retire. I’m worried about the family that’s trying to figure out how they can save for their child’s college education. I’m worried about the single mom that doesn’t have health insurance. I’m worried about the guy who has worked in a plant for 20 years and suddenly sees his job shipped overseas. That’s who I’m worried about. That’s who I’m going to be fighting for and thinking about every single day that I’m in the White House.” Fact: If he’s worried about the couple about to retire, Obama should be asking himself why he wants to tank their 401(k) nest egg by raising capital gains and dividends taxes. If he’s worried about the parents saving for college or struggling to afford health insurance, he should ask himself if raising their small business employer’s tax rate to over 50 percent is a good idea. If he’s worried about the longtime employee’s job getting shipped overseas, he should ask if the fact that America has the second-highest corporate income tax rate in the world has anything to do with that.

Anyone who has a retirement savings account should be concerned at this point. Money that you worked for, that you put away so that in your autumn years you could live comfortably, is going to be confiscated for Barack Obama's efforts at "redistributing the wealth" a la European socialist style.

You can access the complete article on-line here:

Myth vs. Fact: The Obama Infomercial Lies to Taxpayers About Obama Tax Hike
Americans For Tax Reform
October 30, 2008

Joe Wurzelbacher: The New Symbol Of American Small Business

ABC's Teddy Davis has a report about Joe Wurzelbacher, the plumber who asked Barack Obama about taxing small businesses, and the plumber's views on those taxes. Joe has come to symbolize the small business in America and the frustration small businesses deal with when having to face government bureaucarcy and tax laws.

Here is a recap of the exchange between Joe and Obama:

"Your new tax plan is going to tax me more, isn’t it?” the plumber asked, complaining that he was being taxed “more and more for fulfilling the American dream." "It’s not that I want to punish your success. I just want to make sure that everybody who is behind you, that they’ve got a chance for success too," Obama responded. "My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody … I think when you spread the wealth around, it’s good for everybody."

In a moment of unscripted speech, Barack Obama let slip that he is, in fact, a socialist and wants to redistribute America's wealth by taking money away from those who worked to earn it and giving it to those who did not work to earn it.

Thus, it is completely understandable why Joe Wurzelbacher is so infuriated. Here is what he said on Nightline:

"To be honest with you, that infuriates me," plumber Joe Wurzelbacher told Nightline's Terry Moran. "It's not right for someone to decide you made too much---that you've done too good and now we're going to take some of it back." "That's just completely wrong," he added. Wurzelbacher, who says no one from the McCain campaign got in touch with him before Wednesday, was a centerpiece of the third and final presidential debate.

And a majority of small businesses across the American landscape feel the same. Why work to succeed and grow if the government is going to come in and confiscate your earnings? Barack Obama's tax plan would effectively put a roof on how large a business can get, which in turn, also limits how many people a business can employ and how much those employees can get paid.

Joe was trying to make Barack Obama aware of this, but socialists don't listen to such rational arguments.

Now, some libs in the media are starting to parse words and argue semantics over who would get taxed for how much, but they completely miss the relevent point that the Obama plan is still a socialist tax increase that will have devastating effects on our economy.

You can access the complete article on-line here:

Joe The Plumber: Obama Tax Plan 'Infuriates Me'
Teddy Davis
ABC News
October 16, 2008

Petition For The FairTax

Well, Super Tuesday is here. 22 states will be voting in their primary elections. I am hoping that John McCain will not get the GOP nod.

But we'll know more about that tonight. For today, we have a petition to sign in favor of the FairTax. From Congressman John Linder's website:

Message to the House of Representatives: I am tired of worrying about confusing tax forms and stacks of tattered receipts, and frustrated that our tax code continues to undermine our nation’s values of saving and investment. I want to be a “Citizen Co-Sponsor” of the FairTax — legislation that will create a national retail sales tax to replace all income taxes, payroll taxes, and estate taxes, and eliminate the need for the Internal Revenue Service entirely. The FairTax would revolutionize our economy. Without the income tax’s stifling impediment to growth, Americans will be able to save more, and businesses will be able to invest more. Individuals will have incentives to engage in capital formation - the real source of job creation and innovation - more than ever before. Businesses will have incentives to direct large amounts of capital back into the United States. I want you to know that I am enthusiastic about this bill and its prospects for success, and I want all of our Representatives to join us in this fight. I endorse the FairTax and I want you to help make April 15th just another spring day.

Please help us get rid of the ridiculous, intrusive, convoluted and often contradictory tax code we have and help us shut down the IRS. Visit the following website to sign the petition:

Petition For The FairTax
JohnLinder.com
Copyright 2007

My wife owns a small business here in Northern Virginia and I own the building it operates in. Every January is a new set of headaches in getting our tax records straight just to send them to an accountant!

Think I'm kidding? Just check out the 2008 Publication 15 Circular "E" Employer's Tax Guide from the IRS and see how difficult it is to follow the damn thing. And that is just for the employees' wages. Other forms are needed for product sales and services provided by the business. And then there's property taxes, business taxes and others as well.

The FairTax is the only solution that relieves small businesses of the undue burden placed on them.