Alan Bergman: Repeal the Estate Tax?

To the Editor:

We all dream of being rich one day. That is why so many people, who will never be affected by the estate tax,—or as some erroneously refer to it, the death tax—favor its repeal.

The campaign of Rick Berg to eliminate the estate tax is bad tax policy. Most people simply don’t understand is that Rep Berg’ s plan to completely eliminate the estate tax would result in a TAX INCREASE for 99% of North Dakotans. That’s right, it’s a tax increase for the vast majority so that a sliver of people can pass massive estates to their heirs.

By comparison, the most recent estate tax exemption of $3.5 million with a stepped up basis means property falling within the exemption can be sold immediately with no tax at all. Under Berg’s proposal, capital gains taxes will apply on difference of when property was first purchased and when the heirs sell it.

As an example, say a daughter receives a $2 million farmland asset from the parent’ s estate and the farmland was originally purchased for $200,000. Under Berg’s plan to eliminate the estate tax, if the daughter sells the farmland immediately, she would pay capital gains taxes on $1.8 million dollars - the difference in current value and the value when her father first purchased it.

However, using the exemption, if the daughter sells the farmland immediately, there would be no estate tax payable AND there would be no capital gains tax assessed. That’s because the ‘basis’ used to calculate capital gains is the value at the time of her father’s death rather than when he first purchased it.

The net result is that everyone who qualifies for the $3.5 million exemption ($7 million for couples) would have a hefty tax increase if the estate tax is eliminated.

This tax policy effectively increases the tax on the middle class and continues a tax policy of concentrating the wealth of our nation into fewer and fewer hands.

Finally, Rick Berg does not address is how to pay for the $500 BILLION cost of eliminating the estate tax. So we assume it will be borrowed money and added to the national debt over the next decade.

-Alan Bergman
Jud, N.D.