Congress running out of time for estate tax reform
July 13, 2010
by Meat&Poultry Staff
WASHINGTON – Just 30 legislative days are left on the Congressional calendar until the estate tax reverts back to its staggering pre-2001 levels. If Congress fails to act, starting Jan. 1, 2011, farm estates worth $1 million will be taxed at a rate of 55%, said the National Cattlemen’s Beef Association (N.C.B.A.) on July 12.
“If Congress does nothing, they’re in essence handing down a death sentence to family-owned farming and ranching operations,” said Steve Foglesong, N.C.B.A. president. “Taxing family farmers and ranchers out of business will have serious impacts on all Americans, not just in our rural communities.”
Commonly known as the “death tax,” the estate tax disproportionately hits agriculture, according to N.C.B.A. Ninety-seven percent of American farms and ranches are owned and operated by families, and the tax is considered one of the leading causes of the breakup of multigenerational family farms and ranches.
“The death tax promotes the breakup of farms and ranches and the degradation of our nation’s natural resources and wildlife habitat,” said Skye Krebs, Public Lands Council president. “Family farmers and ranchers not only produce the nutritious food and fiber to feed the world’s growing population, they also serve as stewards of the land, air and water that make our way of life possible.”
Because farm and ranch assets consist mainly of land, buildings, and specialized equipment, these estates may look wealthy on paper, but they include few saleable assets and little liquidity to pay estate taxes.
“This is not a tax on the ‘wealthy elite,’” Mr. Foglesong said. “The wealthy can afford accountants and estate planners to help them evade the tax. This is a death warrant for small-to-medium sized family businesses. Farmers and ranchers are often forced to sell land, equipment, or even the entire ranch just to pay off tax liabilities. This is money that could otherwise be reinvested to grow the family business and hand it down to future generations.”
Farm and ranch estates are five to 20 times more likely to incur estate taxes than other estates. According to the U.S.D.A. Economic Research Service, one in 10 farm estates (farms with sales of $250,000 or more annually) were likely to owe estate taxes in 2009.
“Preserving the legacy of American agriculture for future generations should not be a political issue,” Mr. Foglesong said. “At the end of the day, we’re simply asking for the ability to keep our farms and ranches in production and hand them down to future generations.”