Yesterday’s Washington Post had one op-ed on CAFTA by their own Sebastian Mallaby entitled, “CAFTA Deserves to Pass” (more on that tomorrow) that was dead-on right. However, on the topic of death tax, they wrote an editorial that got it as wrong as their last one on this topic.
This one — under the heading, “Estate Tax Myths“, comes down once again squarely on the side of the death tax, citing a Congressional Budget Office study to debunk the claim that farmers had to sell their farms to pay the death tax. However, the Post misses it by a mile once again. Why? Because the CBO study they cite was based on an analysis of a thing called QFOBI (pronounced “Cue-Fobby” — by the tax wonks), a qualified family-owned business interest. “What’s wrong with that?”, you might ask. Well, QFOBI was passed in l997 and was repealed in 2001 for being a dismal failure. According to one analysis, “[T]he Qualified Family-Owned Business Interest…has provided little relief for family farms and businesses, and does not represent a viable approach to relieving the economic and social damage caused by the estate tax.” See, that’s why it was repealed. As a result, any study of its impact is pretty irrelevant to the immediate debate surrounding the death tax.
Let’s try this again (Post editorial writers, are you listening….?):
— The death tax considers death a taxable event, even if the company stays in the family.
— It penalizes the next generation that fully intends to keep the company going but who either have to sell it (sorry, Post) or take on enormous debt. The company loses and the employees lose.
— Small manufacturers — the same ones who struggle mightily each day to remain the best manufacturers in the world in the face of blistering competition, spend on average $52,000 a year on death tax planning. The pie is only so big.
You might want to drop the Post a note (scores of small manufacturers did so last time) at email@example.com, reinforcing some of the basics, letting them know what really goes on outside the Beltway and setting them straight.
And, click here to contact your Senator to urge them to vote this week to permanently repeal the death tax.
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