The South Dakota Republican’s family seems to have had enough cash to pay the estate tax.
The federal estate tax is so burdensome that Rep. Kristi Noem’s family spent 10 years in debt just to pay the bill after her father died in a farming accident, the South Dakota Republican has repeatedly claimed throughout her political career.
Republican leaders love this tale of hardship so much they appointed Noem to the committee that negotiated the final version of their tax legislation, which will make the estate tax far more lenient, a change Republicans say will protect farms and small businesses.
But documents from Noem’s father’s estate show the congresswoman has omitted important details. After her father died in 1994, Noem’s mother received a life insurance payout big enough to pay the estate tax bill several times over, according to documents that HuffPost obtained from Hamlin County’s clerk of courts.
Since taking office during the Tea Party wave of 2010, Noem, who is now running for governor of South Dakota, has never mentioned the insurance nor disclosed the amount of the tax, though she’s characterized it as a crushing burden.
“We had a tough choice: sell off a portion of our family farm or face a decade in debt,” Noem wrote in a Fox News op-ed last month. “We took a decade in debt and struggled to keep our heads above water.”
Taxes can indeed be a burden, but Noem’s story shows that contrary to Republican talking points about how the “death tax” hurts farmers and small business owners, the tax actually comes with special provisions designed to accommodate them.
In Noem’s case, it was a fluke the tax hit her family at all: Noem’s father, Ron Arnold, had an outdated will that failed to utilize a marital deduction allowing the entirety of an estate to pass to a surviving spouse untaxed. In other words, if it weren’t for poor planning Arnold’s estate wouldn’t have faced any tax.
Probate documents show the land, machinery, livestock and other property owned by Arnold were worth $4.5 million. After subtracting debts and other deductions, the taxable estate came to $1 million. Though the documents don’t specify how much estate tax was owed, experts say it was probably about $169,000.
A six-figure tax bill is nothing to sneeze at, but neither is a seven-figure insurance payout. Though Noem’s father had failed to update his will, he had done a good job of making sure his family would have some cash. Noem’s mother received $1.1 million from her husband’s life insurance policies, most of which she apparently loaned to the estate.
