The final stop on President Obama's three-state Midwest bus tour was at the Country Corner Farm Market in the small town of Alpha, Illinois. The president was roughly an hour behind schedule due mostly to a visit with the Galesburg High School football team, and although the crowd showed some signs of fatigue from waiting in the hot sun, most left the event saying it was worth the wait.
Although his opening remarks didn't change too much, the president did field one interesting question about the future of the estate tax that is worth looking at. I think it's the only question the president got on this topic the whole trip. Here's the exchange as per a transcript provided by the White House:
QUESTION: Thank you, Mr. President, for being here today in Henry County. My name is Karen Urich (ph). I’m a multigenerational farmer, member of the Henry County Board and Henry County Farm Bureau. My question that I have today is I have a concern over estate taxes.
In 2013, if the Senate and the Congress fails to act, we will have our estate taxes go back to the 2001 level. We have family farms that are experiencing having to sell their land in order to pay the property taxes. And I was wondering what you see for the future of the estate tax. Thank you.
THE PRESIDENT: Well, there’s no reason why we have to go all the way back to the 2001 level. There is a compromise that has been discussed where you’d essentially have a $7 million exemption per family. There are some folks who just want to eliminate the estate tax all together. There are others who want to hike it up back to 2001.
There’s a mid-level proposal that would exempt most - almost all family farms and nevertheless would still hit folks like Warren Buffett and make sure that he is able to pay what he wants to pay in terms of passing on something not only to his family, but also to the country that has blessed him so much.
So this is going to be part of the larger debate we have about the tax code. And the one thing I want to emphasize, a lot of folks don’t realize this, but there are only 3 percent of the population that has an annual income of more than $200,000 a year. Think about that, 97 percent of folks, their annual income is less than $200,000. And there are only less than 1 percent who are making millions of dollars. And then there’s less than one one-hundredth of 1 percent who are in the Warren Buffett category. That top 1 percent - in fact, that top one-tenth of 1 percent, those are the main folks who have seen their incomes skyrocket over the last 10, 15 years. Ordinary families, including family farmers, basically your incomes and your wages have flatlined over the last decade.
And so when we think about tax reform we should be thinking about fairness. What’s fair? Nobody likes paying taxes. I promise you, I don’t like paying taxes. But I do believe in paying what I use - paying for what I use. And if I want good roads, and if I want good schools for kids, and if I want the best universities in the world and I want to make sure that we’re continuing to invest in agricultural research at places like University of Illinois that have helped to make us the most productive farmers in the world, then I think I should have to pay for it. And if I’m better able to pay for it than a waitress who is making $25,000 a year, I don’t mind paying a slightly higher rate. There’s nothing socialist about that. That’s just basic fairness.
And, by the way, when you hear folks saying, well, you know what, that’s job killing - that’s not job killing. When Bill Clinton was President we created 22 million jobs with a tax rate that was much higher across the board than it is now. We don’t have to go all the way back up there on the estate tax or any other taxes for us to close our deficit and our debt, but we should ask oil and gas companies that are making record profits that they don’t benefit from a special tax loophole that the mom-and-pop store in Alpha doesn’t get. And I don’t think there’s anything wrong with asking me to pay a little more so our senior citizens don’t have to pay an extra $5,000, $6,000 a year for their Medicare. (Applause.) That’s what we’re looking for, is balance in terms of our tax policy. (Applause.)