Members of North Carolina’s Revenue Laws Committee are considering drafted legislation to repeal the state’s death tax. North Carolina’s death tax is tied to the federal estate tax. Thus, as of Jan. 1, 2013, both the federal and the state tax will be applied to estates with assets of $1 million or more (the previous exemption was $5 million). The lower exemption means that more and more small businesses and family farms will be subjected to the tax, jeopardizing the rights of the owners to pass down their property to their heirs.
State lawmakers are concerned about the loss of revenue to the state if the estate tax is repealed, but the amount collected will amount to less than one percent of state revenue.
To be sure, the death tax has a real impact on real families. View the three minute video below to see the stories of two North Carolina farming families concerned that the death tax may force them to give up the farmland that had been in their family for generations.
The larger question is why the government has any claim to a person’s money because he/she passes away.
Ben Perry, Jr. says
Mom passed away in 2005. At that time her estate value was less than the federal exemptions. However, it was not so on the state exemptions. Her estate owed about $27,000 to the State of North Carolina with nothing owed to the IRS. If it had not been for the then temporary exemptions her estate would have owed a total of $1,145,000 in death taxes. At her death, she had less than $1,000 in cash. In order to get that much money the farm would have to be sold. If property values and tax values were the same, and a ready and willing buyer could have been found, there may have been some money left over for her estate. Of course, there would have been a capital gains tax to pay on the sale. Since she and Dad only paid $8000.00 for the farm in 1948, the estate would have owed another 15% in capital gains on any amount received over that initial cost. To satisfy the tax man, the total pay out would have been over $1,500,000. Not only do the death tax rates need to be eliminated, but the capitol gains tax needs to eliminated in such cases.
Today’s real property value for her farm would be far less than the established tax value for it. It is highly probable, in today’s market, that a sale of Mom’s estate would not realize enough cash to pay the tax man if the current exemptions do not remain in place. I miss my Mom very much and wish she were still here. However, I’m grateful she didn’t have to live to see all she and Dad worked for stolen by an over burdensome tax code.
Emory Liggett says
The next time, if there is a next time should we survive Obama as free citizens of a free country, we should ask the question exactly what does he mean by hope and change? I took an oath to defend my country from enemies foreign and domestic, I’ve been fighting communists all my life. Now I’m sick to death that my own countries government is the communist enemy. Is it time to call up the constitutionaly described militia, to defend America against a domestic enemy, our own government. Is anything about this over taxation burden on the death tax, any different than what the revolutionary patriots, fought a war to free us from, an oppressive government any different. Remember the founding fathers didn’t believe in any tax on the American people. That is the true foundation that built the greatest nation on earth.
Glen Bradley says
Interestingly enough, the Interim Committee on Agricultural Regulation co-chaired by your humble correspondent has been putting together a bill to eliminate the estate tax on bona fide farms for the last three months. Hope this message finds you well!