DEATH TAXES
(Continued From Page 8)
cotton farms in the Mississippi
Delta.
Research topic. For all these
reasons, ERS reports estate
planning is more important than
ever for the farmer-and some of
ERS’s future research is going to
be in this direction.
There are a number of ways
that some of the heavy tax
“burden can be lightened-but
these methods aren’t widely used
by farmers.
For instance, if property is
given away during one’s lifetime,
you pay a gift tax instead of an
estate tax and the rate of taxation
is lower. Moreover, the gift tax
rate, nominally 75 percent of the
estate tax, decreases to an ef
fective rate of 56 percent of the
estate tax rate for a transfer of
$10,500 (after taxes) to 40 percent
for $1.5 million, and to 17 percent
for a $lO million transfer.
Unused. With the tax ad
vantage favoring gift transfers,
it’s surprising to find they are
used only in a minor way,
4
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-
BANVEL. Herbicide
Post-emergence application
gets to the root of your tough
broadleaf weed problem
Banvel from Velsicol controls hard-to-kill broadleafs ...
\
smartweed, pigweed, morning glory, thistle, many others.
For one simple reason. Banvel translocates.
LANCASTER
Royster Farm Service Center
500 Running Pump Road
Organic Plant Food Co.
2313 Norman Road
Richard R. Forry
2020 Horseshoe Road
Harold B. Zook
220 Lampeter Road
BIRD-IN-HAND
Aquilla Smoker
R.D.I
FARM CAPITAL MOSTLY IN
LAND AND BUILDINGS
Type of Farm
Dairy (Southeast Wis.)
Poultry, eggs (NJ.)
Broilers (Ga )
Hog-beef fattening
(Corn Belt)
Cash grain (Corn Belt)
Cotton (Miss. Delta)
Tobacco (Coastal Plain,
N.C) 87
Tobacco-beef (Ky.-Tenn.) 79
Winter wheat
(Southern Plains) 84
Cattle ranches (Southwest) 80
Average, all U S farms 78
especially by owners of large ment showed this: of some 2,200
estates. decedents with gross estates of $1
A special study in the late million or more, about half had
fifties by the Treasury Depart- made any taxable gifts at all
Absorbed by leaves, stems, roots, Banvel
moves with plant fluids from leaf tip to root
tip. Destroys as it goes. So, no regrowth. Ask
us for application details about Banvel, today.
Distributed By
P. L. Rohrer & Bro. Inc.
Smoketown, Pa. Ph: 717-397-3539
Value of land
and buildings
as percent of
farm capital
Percent
64
80
78
72
90
84
EAST PETERSBURG
Chemgro Fertilizer Co., Inc,
ELM
Bomberger’s Store
PARADISE
Benjamin B. Landis
R.D.I
Paul S. Beiler
R.D.I
QUARRYVILLE
Lancaster Bone Fertilizer Co., Inc.
ESTIMATES OF DEATH TAXES FOR FARMS, 1961 AND 1968 1
Type of farm
Dairy (Southwest Wis)
Cash gram, Corn Belt (III)
Hog-beef fattening, Corn Belt (Mo )
Cotton, irrigated High Plains (Tex )
Cotton, Miss Delta (Miss)
Tobacco (N C)
Wheat-fallow, Wash-Ore (Wash )
Winter wheat, S Plains (Kan )
Cattle ranches, Southwest (Anz )
Cattle ranches, N. Plains
Cattle ranches, N Rockies (Idaho)
1 Property assumed to pass one half to widow, one fourth to each of two adult children on death
of husband Widow's share passes equally to each of two adult children on her death 2 Land,
buildings, improvements, machinery, equipment, and crops Farm is assumed to be the only
asset in the estate and to be debt-free 3 Not applicable
during their lifetime.
Under present law an in
dividual can, during his lifetime,
give $30,000 tax exempt. In ad
dition, he can give $3,000 each to
individuals each year For
married couples, these amounts
are doubled
Start early. A couple with two
children and four grandchildren
could easily transfer an estate of
over $700,000 without paying
taxes To do this, the couple
would only have to start a
program of systematic giving
some 10 to 15 years prior to the
end of their actuarial life ex
pectancy.
By the same token, if they
made no gifts during their
lifetime, the Federal estate tax
could be over $200,000 on a
$700,000 taxable estate
The Federal estate and gift
taxes are unique in that they have
been substantially unexamined
and unrevised since the early
1940’5. They still have the same
exemption and the same rate
scale-a fact not duplicated by
any significant Federal, State, or
local tax over this time period.
Reasons for reform. During
this time a number of inequities
have developed, economic
conditions have changed, and
added revenues are needed to
finance government activities
all reasons for tax reform
measures.
Of the general proposals af
fecting farmers, taxing capital
appreciation at death would have
the greatest impact on farm
- • "Lancaster Farming. Saturday, Ju1y7,1973^
Federal and
Total farm State death
capital taxes as per
per farm 1 cent of capital
1961 1968 1961 1968
- - - Dollars - - -
62,400
105,900
86,800
117,300
214,400
96,300
160,700
- - Percent - -
2.5
1.1
0.8
0 1
6.1
102,800
227.700
175,600
464,900
440,000
50,400
205.100
147.100
220.100
406,500
298.700
02
2.1
estates. This proposal also
departs most radically from
current tax rules.
Under present law, assets
which have appreciated but
which have never been sold are
not taxed as capital gains As
part of an estate the assets are
subject to an estate tax but the
appreciated value is never taken
into account and taxed as in
come
Some tax experts feel the
present law is inequitable in that
it gives an advantage to persons
who accumulate their wealth
through untaxed appreciation
compared with those who ac
cumulate their wealth through
savings from taxable income or
who have to sell their appreciated
assets prior to death.
Lengthening payments. Among
the other tax reform proposals
that would affect farmers is one
to liberalize rules concerning
payments.
While careful business and
estate planning can alleviate or
eliminate many liquidity
problems, the very nature of
farming does not always permit
the needed planning and
flexibility to achieve liquidity for
prompt payment of estate taxes.
Proposed changes will likely be
specifically designed for the
farmer and other closely held
businesses to facilitate payment
for up to 10 years.
9
2.9
90
1.8
19.8
17.7
1.3
7.1
1.8
6.4
190
15.2