Galen Niederwerder offers some insightful political commentary. You’ll enjoy his thoughts in this article.
Perfect storm: “A confluence of events that drastically aggravate a situation.” (wikipedia.com)
You know; like the movie starring George Clooney, in which a fishing boat is caught between two gigantic storm systems and a hurricane. It did not have a happy ending.
Well, you’d better head for the cellar, because one appears to be looming on the horizon. No, not the end of the world according to the Mayan calendar on December 21st; it will be much worse than that. January 1, 2013. That’s the day the Bush tax cuts expire. What will the landscape look like afterwards? Crack open the cellar door, and let’s have a look.
If the Bush tax cuts are allowed to expire, tax rates will revert to those which were in effect at the time the cuts were passed. If you’re in the 10% bracket, your rates will go to 15%. In other words, if you pay $1,000 now, you’ll pay $1,500 next year – a whopping 50% increase. Other brackets also increase, but those at the bottom of the income spectrum face the most egregious hike. So much for President Obama’s mantra of making only the “rich” pay “their fair share.”
Also, long-term Capital Gains currently taxed at 15% will increase to 20%, but dividends will now be taxed at ordinary income rates – as high as 39.6%. Ouch.
And the estate tax – or as it’s more commonly referred to, the death tax – will come roaring back with a vengeance. Today, the Inheritance Tax rate is zero, but if the Bush cuts are allowed to expire, estates over $1 million will be taxed at 60%. So if you plan on passing on your ranch to your kids instead of the IRS, better update that plan to include dying this year.
Because land values have increased over the last decade, even an average sized farm or ranch will qualify for this wealth re-distributive tax. Many of these places have been around for more than a century, with third, fourth, and even fifth generations of family members now making their living off the land. They have survived countless prairie fires, the Dirty Thirties, twenty-plus percent interest rates in the 1980’s, and – so far – property taxes based on some bureaucrat‘s idea of production “potential.” Can they survive this latest attack from their own government? It’ll take some deep pockets.
According to the 2007 Census of Agriculture, the average-size farm or ranch in Pennington County was 1,809 acres, and in Meade, it was 2,513 acres. Increased commodity prices have recently had an incredible impact on land values in Iowa and eastern South Dakota; some of that is spilling into our country as well.
Assume the approximate market value of ag land in these counties averages $700/acre; that estimate could be low. That would mean the value of the average farm/ranch in Meade is over $1.7 million; in Pennington it’s almost $1.3 million. This average-sized place would be almost a minimum required sized place to make any semblance of a living on, yet it fits Obama’s perspective of “rich.” Add in equipment, livestock, and whatever savings they’ve have been able to scrape together over the decades, and you’re looking at a situation in which almost every farmer or rancher you know is, lucky them, going to be included in Obama’s 2008 pledge to spread the wealth.
If President Obama’s definition of fair includes selling off the place that’s taken generations to build, if he’s going to hog the lion’s share of whatever meager increase your investments may have recovered, if he insists on raising taxes by 50% on those who make minimum wage, then we’d be better off electing Genghis Khan in November. Then, the pillaging would at least make sense.
Was that thunder?
