4. Ethical Issues Case Method

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4. Ethical Issues Case Method Example in
Agriculture/Environmental Problems

• Larry D. Sanders
• Spring 2002

Dept. of Ag Economics Oklahoma State
University
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INTRODUCTION

• Purpose
• to understand how the case method is applied to
  an example of ethical issues in agriculture and
  the environment
• Learning Objectives
• 1. To review the case method outline and
• objectives.
• 2. To apply the method to an appropriate
  example.
• 3. To understand the generic applicability to a
• variety of issues.
• 4. To understand how ethics sensitivity
  enhances
• understanding of problem many improve
  resolution.

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Case Method Outline for Lecture/Seminar

• Introduction of Problem
• Discussion of Problem
• Discussion of Ethical Issues related to Problem
• Suggested Resolution of issue with ethics
  considered
• Homework assignment or in-class activity (answer
  key to instructor)
• Class handouts
• --notes
• --key definitions
• --sample exam questions (answer key to
  instructor)
• --references (as appropriate)

4
Case MethodExampleEstate Taxation

• Introduction of Problem
• A. The Problem
• --Many citizens feel it is unfair to tax
  property at death, especially in agriculture. As
  some say, If I own it at my death, why cant I
  pass it on to my heirs without them having to buy
  it again or sell off assets to pay Uncle Sam?
• B. Key Current Alternatives
• 1. The status quo provides for an increase
  in the
• exemption phased in over a period of years.
• 2. The Bush Administration is proposing a
  total
• elimination of the so-called death
  tax.
• 3. Some have proposed a compromise.

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Case MethodExampleEstate Taxation

• 2. Discussion of Problem
• A. Background/History
• 1. Tyranny of European landed aristocracy
• --State Penn. 1825
• --Federal
• --Revenue Act of 1916 (to fund national
• emergencies)
• --1932-41 estate taxes increased
• --1976 estate/gift taxes united
• --1981, 1987, 1997 estate tax capped, then
  reduced
• 2. American democracy equality/equity

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Case MethodExampleEstate Taxation

• 2. Discussion of Problem
• A. Background/History (continued)
• 3. Current Data
• --50 billion in estate taxes/year
  (estimates vary)
• --Top 1 (2.6-2.9 million) pay 80-90
  of estate taxes
• (40-45 bil. by some estimates)
• --Top 0.1 pay half of estate taxes
• --Farms account for less than 0.5 of
  taxable estate assets
• --Family-owned businesses/farms get
  special treatment in
• valuation at current use rather
  than market value,
• possibly payment deferral (non-farm
  family-owned
• business not eligible for use
  valuation)

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Case MethodExampleEstate Taxation

• 2. Discussion of Problem (continued)
• B. Recent/Current Actions
• 1. 1990sincreased exemption phased in
  (state
• federal)
• --current 675,000 exemption increases
  to
• 1 million exemption for all estates by 2006
• (unlimited amount exempted in transfer to
• spouse)
• --current 1.3 million exemption for
  family-owned
• businesses/farms

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Case MethodExampleEstate Taxation

• 2. Discussion of Problem
• B. Recent/Current Actions (continued)
• 2. 2000 Presidential election--key part of
  debate
• --Bush wanted to eliminate death tax
• --Gore wanted to increase exemption
  (5-10
• million phased-in over 3-5 years)
• --GOP plan to increase exemption to 5
  million
• 3. Bush Administration tax cut
• --plans to phase-out estate tax over
  period of years
• C. Rationale for key alternatives
• --Economic and/or Intrinsic

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Case MethodExampleEstate Taxation

• 3. Discussion of Ethical Issues Related to
  Problem
• Moral Justification
• For Status Quo (or higher estate tax)
• --Land portion of assets is not for private
  holding/use should be shared by all and or
  returned to nature
• --Ownership gives no rights beyond death
• For Phase-down/elimination
• --Property rights are absolute and/or dispensed
  by God, not man
• --The work ethic justifies rewards for hard work
  , by rights, land freely bought and paid for,
  should be used/sold/passed on at owners desire
  without impediment

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Case MethodExampleEstate Taxation

• 3. Discussion of Ethical Issues Related to
  Problem (continued)
• B. Empirical Justification
• For Status Quo
• --Recoups unpaid capital gains taxes
• --Fairness concept requires method to minimize
  wealth concentration
• --Progressive concept requires method for
  wealthier to pay more
• --Elimination of tax could be regressive if
  government needed to compensate for loss of
  revenue
• --May be a way to force wealthy to pay for
  loopholes
• For Phase-down/elimination
• --Those who pay most should get the biggest tax
  cuts
• --The wealthier create wealth that spurs economy
  (trickle-down theory)
• --Gifting to charity may be higher
• --IRS expense to capture estate taxes may not
  justify the revenue

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Case MethodExampleEstate Taxation

• 4. Suggested Resolution with Ethics Considered
• A. Problem/Issue Identified (public becomes
  aware)
• B. Problem defined
• --Include Science, Technology, Ethics,
  Policy
• C. Decision-Making Process
• --Include Science, Technology, Ethics,
  Policy
• D. Monitor Evaluate
• 5. Homework
• 6. Notes/References/etc.
• --IRS studies
• --Institute for Taxation Economic Policy
• --Congressional Research Service
• --The Oklahoma Observer