Estate Taxes

The subject of closing costs is frequently raised in Mailbag inquiries -- how they are calculated, the major components, and whether they vary among Maryland's 24 subdivisions -- the City of Baltimore and the 23 counties.The best way to calculate closing costs is simply go to a lender, real estate agent or title company -- they are usually happy to do the math for a potential customer.In general, closing costs in Maryland are about 5 percent to 6 percent of the purchase price.Major components of the closing costs are the state and local transfer and recording costs, lender charges and about 13 months' escrow for real estate taxes.

Please, let me click my heals to find out I am still in Baltimore after all ("Mayor takes a risk," Feb. 12). We city residents have stuck by Mayor Stephanie Rawlings-Blake as she promised lots of magical change if we only stay. We waited patiently to see if she really would invest in our neighborhoods - those of us who don't live at the Harbor or in Canton, that is. We gulped when she closed recreation centers at a time when our crime rate is still too high, but we didn't bolt. But now the mayor has proposed a fee for picking up our trash.

Your Jan. 17 editorial, "Death and farming," misses much of the big picture. If few farm families are taking advantage of a pilot tax program, perhaps it is not because tax relief is not needed. Rather, it may indicate that in many cases the mere deferment (for seven years) of the state's part of a crushing state and federal estate tax burden is of insufficient help to the cash-poor heirs of family farms. A big picture should include that Maryland's estate tax rate of approximately 16 percent is much higher than that of most states (and many states have no inheritance tax)

Personal representatives of estates watch out! The Maryland comptroller is warning that a business calling itself IRFS in Annapolis is claiming to be collecting debts on behalf of the state. The business is sending out notices to personal representatives, saying the estate is delinquent on taxes. The comptroller said the business asks for unpaid taxes and interest, plus it sends a payment coupon for the alleged tax liability. Not only that, the notice tells representatives to take out a loan to pay off the debt or otherwise face a lien on the bank account or a garnishment of wages.

THE REPEAL OF the federal estate tax, included in the $1.35 trillion tax cut, will make estate planning more complicated than ever for many, experts say. Over the next 10 years, the amount of assets individuals can shelter from estate taxes rises and the top tax rate declines. The estate tax is fully repealed in 2010, but the law carries a "sunset" provision under which the tax will reappear in 2011 unless Congress takes action. Lawyers and other estate planning experts warn not to count on Congress' keeping the tax repeal.

BOSTON --For naked class warfare, it is hard to beat the estate tax. "If we were to give a prize for the single worst idea to come forward from a group that's been rife with them, it would be this," fumed Rep. Barney Frank, D-Mass., as the House voted by a healthy margin to phase out the federal tax on inheritances. "Their idea is this: `Let's make the tax code of America better for very rich people. Let's give substantial tax relief to the richest people we can find.'" Does Mr. Frank really believe that?

"Digging for Gold in Your Own Back Yard" is the intriguing title of a new book about how homeowners can try to lower their real estate taxes. According to promotional material accompanying the book, owners who present a "well-documented" case have an 80 percent chance of winning a tax reduction."Digging for Gold," by Gary Whalen ($19.95 paperback, R.E.I. Press), takes a step-by-step approach to appealing a tax assessment.It starts with sections on understanding how tax bills are determined, and outlining a procedure for determining whether an assessment should be challenged.

Congress wants to end the federal estate tax. That's the tax paid when children and others inherit a large amount of money. President Clinton vetoed repeal, saying it was merely a break for the rich. President Bush favors repeal or at least a big reduction in the tax. So conditions currently favor a reduction, at the very least. Two questions arise: Would you be affected by an estate-tax cut, and if so, is there something you should be doing now? The first thing to know is that few Americans pay estate taxes.

WASHINGTON -- Courting accusations of economic recklessness from Democrats and fiscal timidity from his Republican rivals, George W. Bush will unveil today an economic plan that includes modest reductions in tax rates, an end to estate taxes and a reduction in the "marriage penalty" levied on some two-income couples.The Republican presidential front-runner is already facing criticism from his Republican foes that his proposal is far too modest, because he has rejected the sweeping changes to the tax code that other candidates have embraced.

Legislation giving lucrative tax breaks to developers of hotels and other major projects in downtown Baltimore cleared the General Assembly last night in the waning hours of the 90-day session.The measure, a priority of downtown development advocates, received overwhelming approval from the Senate and House of Delegates, despite complaints from some Baltimore community groups about the bill's favored treatment of politically connected developers, such as bakery magnate John Paterakis Sr.The bill passed the Senate by a vote of 46-1, with Baltimore Democrat Perry Sfikas the lone dissenter, and the House by 115-19.

The 15-year real estate tax abatement for the Superblock in West Baltimore raises important policy issues that need to be addressed. Specifically, should the city — and in certain cases, the state — grant economic incentives for real estate developments that 1) create competitive disadvantages for existing property owners and 2) reduce the city's property tax revenues from large-scale commercial developments? From my private-sector perspective, the answer to the question is simple: Granting tax abatements that disadvantage existing taxpaying properties is wrong and will lead to an overall loss of tax revenues for the city.

Your Jan. 17 editorial, "Death and farming," misses much of the big picture. If few farm families are taking advantage of a pilot tax program, perhaps it is not because tax relief is not needed. Rather, it may indicate that in many cases the mere deferment (for seven years) of the state's part of a crushing state and federal estate tax burden is of insufficient help to the cash-poor heirs of family farms. A big picture should include that Maryland's estate tax rate of approximately 16 percent is much higher than that of most states (and many states have no inheritance tax)

Your editorial "Death and farming" (Jan. 17) claims that there are no reliable numbers about farms subjected to estate taxes. Here's one: 22,000. According to a 2010 American Family Business Foundation study by economist Adam Davies, that is the number of family farms that are currently susceptible to the nightmare of getting taxed upon a death in the family. To add to this unfortunate dilemma, Maryland is one of just 20 states that discourage successful family businesses and farms by piling their own estate tax on top of an already burdensome federal estate tax. Maryland's estate tax forces family farmers to pump working capital that could be used to pay employees, upgrade machinery and buy new equipment into life insurance and estate plans to protect their property from confiscation.

As a general rule, I am opposed to tax breaks that favor specific groups of taxpayers (e.g. those with mortgages, those who can afford to make generous charitable contributions or - my all time favorite - commuting federal government workers). However, in the case of estate tax breaks for farmers, I make an exception. Ideally, Maryland would eliminate or significantly reduce its onerous estate tax to stem the exodus of wealthy retirees to Florida and other states with no or low estate taxes.

Last year, Gov. Martin O'Malley testified in favor of legislation that would allow small farms to be excluded from Maryland's estate tax. The bill failed, but it's almost certain to get serious consideration this year since Senate President Thomas V. Mike Miller recently endorsed the proposal, too. The argument in favor of such an exemption is compelling. Farm estates typically feature high-value land with far less in cash and other liquid investments. Heirs may be forced to sell the land to meet the tax obligation, thus accelerating loss of crop land as more is converted into tract homes, shopping centers and other forms of sprawl development.

Senate President Thomas V. Mike Miller said one of his aims during the legislative session that starts this week is to trim Maryland's estate tax where it applies to the inheritance of family farms. Miller, a Calvert County Democrat, said that too often the heirs to family farms are forced to sell property for development because they can't afford the estate taxes. He said he'd like to get rid of the tax entirely when a parcel stays in farming and in the family but recapture the revenue if the inherited property if ever sold off for development.

I am 72 and my husband is 82. We have $1.5 million in certificates of deposit and money market accounts. We rent, and own no property or stocks or bonds. A young man has become very friendly with my husband over the last year. He has told my husband that he has a friend who, for $15,000 or more, will set up papers for us so the remaining spouse will not have to pay inheritance tax. He said if we don't have these papers drawn up, the surviving spouse will not be able to take any money from any accounts.

Congratulate accountants. Don't worry too much about lawyers. And you might want to give condolences to some insurance agents. These are some of the winners and losers if federal estate and gift taxes are repealed as now being proposed in Congress. The repeal has widespread support. A Gallup survey last year found 60 percent of Americans polled favored a repeal of the tax. Few people actually pay estate taxes because estates of $675,000 or less are exempt. Of the 2.3 million adults who died in 1998, only 41,331 estate tax returns were filed, or 1.79 percent, according to the latest figures from the Internal Revenue Service.

A newly minted Republican lawmaker from Frederick County has found a heavy-hitting Democrat to lend support to her proposal to give tax breaks to family farmers: the governor. Del. Kathryn Afzali wants to exempt the heirs who would keep a farm running from estate taxes on the first $5 million of land value. Property valued above that amount would be subject to a 5 percent rate — a steep reduction from the 16 percent now on the books. "Maryland's farmland is shrinking," Afzali told members of the House Ways and Means Committee on Thursday.

This Labor Day finds almost 17 percent of Americans unemployed or no longer looking for work. We must get them into the economy. They are prevented from working by government policies, and that is just not fair. Plus, we need them to help us handle our global competitors. Our country needs to create an economic and educational culture that welcomes our unemployed back in the fold and makes it easy for companies to invest in equipment that will lead to growth. What is the problem?