It appears that Rudy has insulted Deb and Jerry VonSprecken of Olin, Iowa:
Last weekend Deb and Jerry VonSprecken of Olin received a call from former New York City Mayor Rudy Giuliani’s campaign office asking them if they would be interested in holding a campaign rally on May 4, after she had donated to his campaign. “We thought it would be an honor and agreed,” said Jerry … On Tuesday Deb received a call from Giuliani’s Des Monies office and was asked to call New York. “They wanted to know our assets,” she revealed, and added that she and Jerry have a modest 80 acre farm and raise cattle. Later she received a call from Tony Delgado at the Des Monies location. “Tony said, ‘I’m sorry, you aren’t worth a million dollars and he is campaigning on the Death Tax right now.’ then he said they weren’t going to be able to come,” Deb continued.
While the press has been rather silent on this snub, the liberal blogs are all over it, including this from Kevin Drum:
It sounds like Giuliani’s gang was playing an old time conservative game: trying to find a family farm that would eventually have to be sold in order to pay inheritance taxes.
Kevin notes that rightwingers have never found such an insistence and points out something from David Cay Johnston on why they can’t find one example of their bogus claim:
Harlyn Riekena worried that his success would cost him when he died. Thirty-seven years ago he quit teaching to farm and over the years bought more and more of the rich black soil here in central Iowa. Now he and his wife, Karen, own 950 gently rolling acres planted in soybeans and corn. The farmland alone is worth more than $2.5 million, and so Mr. Riekena, 61, fretted that estate taxes would take a big chunk of his three grown daughters’ inheritance.That might seem a reasonable assumption, what with all the talk in Washington about the need to repeal the estate tax to save the family farm. “To keep farms in the family, we are going to get rid of the death tax,” President Bush vowed a month ago; he and many others have made the point repeatedly. But in fact the Riekenas will owe nothing in estate taxes. Almost no working farmers do, according to data from an Internal Revenue Service analysis of 1999 returns that has not yet been published. Neil Harl, an Iowa State University economist whose tax advice has made him a household name among Midwest farmers, said he had searched far and wide but had never found a farm lost because of estate taxes. “It’s a myth,” he said. Even one of the leading advocates for repeal of estate taxes, the American Farm Bureau Federation, said it could not cite a single example of a farm lost because of estate taxes.
But suppose you just inherited the family business that is likely worth $100 million as it generates about $10 million in profits each year. Won’t you have an overwhelming tax bill that will force you to sell the family business? If anyone believes this – they haven’t a clue how the game is played. Let’s return to an example I ran back on June 20, 2006:
But back to the estate attorney who has a Rolodex of appraisers who will give him any whore answer for the right fee. The appraiser/whore that is chosen to evaluate the fair market value of the business has three tricks up his (her) sleeve. First, let’s assume that this S corporation (which pays no income taxes) has to become a C corporation (which of course is hogwash) so we can assume a phantom 40% income tax rate reducing $10 million to $6 million. Next, let’s use some “build-up” approach (aka junk science) to assert a 20% cost of capital putting forth a value estimate of only $30 million. Wow – magic, but we are not done. Remember those “valuation discounts” for fictitious matters like minority owner discount (after all, the parents were all about cheating the kids) – which means we take an arbitrary 30% to 35% discount. So now the business is appraised at $20 million and with the $4 million exemption, the tax bill is only $7.36 million. Wow – an effective estate tax rate less than 8%. But then the kids will have to borrow, which means each has to pay the bank around $90,000 a year in interest out of their $2.5 million per year in operating profits.
You might protest that the Gifts & Estate division of the IRS might challenge this $20 million low-ball valuation – so let’s suppose the estate has to settle at a $50 million valuation to get the IRS to close the examination. Given the current estate tax schedule, the estate will owe something less than $20 million in taxes. It would be relative easy to borrow this amount and pay about $1 million in interest per year, which still leaves about $9 million in income even after paying this interest. And if the estate found the private banks reluctant to lend the money, the government will give the estate 15 years to pay off the tax bill. So with $1.9 million in interest and amortization payments per year, the tax bill can be fully paid off with the kids getting to keep over $8 million in income per year for this period.
Anyone pushing the line that the estate tax will force the kids to sell the family business is either dishonest or too stupid to be our next President. After all, the President we have had to endure for the past six plus years has fed us this incredibly stupid story over and over. If Rudy Giuliani wants to be Bush43 II, why would anyone vote for him?