Time to put death taxes to rest
Created: 11/30/10 (Tue) | Topic: Issues
American Farm Bureau Federation President Bob Stallman said today it was time to put death taxes to rest. In a press conference with other agriculture organizations at the National Press Club, Stallman said the estate tax is especially damaging to farm families.
“Eighty four percent of farm assets are real estate-based,” said Stallman. “When Uncle Sam comes to pay his respects, surviving family members without enough cash on hand may be forced to sell land, buildings or equipment they need to keep their operations going.”
Although 2010 is an estate tax-free year, under a tax law passed in 2001, the tax returns on Jan. 1, 2011, with a top rate of 55 percent and a $1 million exemption. With such a low exemption, as many as 13 percent of farms and ranches whose owners pass away could owe estate taxes next year, according to the Agriculture Department.
A higher exemption and lower rates would give farmers and ranchers a better chance to remain in operation when transferring from one generation to the next. Farm Bureau is calling on Congress now to provide a permanent estate tax provision that would increase the exemption level to $5 million, adjust it for inflation and reduce the maximum rate to 35 percent.
“As farmers and ranchers we continue to stand by our goal of eliminating death taxes, which amount to little more than double taxation since the income is taxed first when it’s earned and again when it is transferred to heirs,” said Stallman.
According to AFBF, estate tax reform must also include stepped-up basis, which limits the amount of property value appreciation subject to capital gains taxes if the assets are sold. Because farmland typically is held by one owner for several decades, setting the basis on the value of the farm on the date of the owner’s death under stepped-up basis is an important tax provision for surviving family partners.
“With estate taxes, farm families’ heartache is felt well beyond the gates of their operations as the rural communities and the businesses we support also suffer when farms and ranches downsize or disappear,” said Stallman. “Further, when estate taxes force farm families to sell off land to pay the taxes, farmland close to urban centers that is sold can be lost forever to development.
“In essence, estate tax relief is not only about a cattle operation in Texas, it’s also about the family in New York City sitting down to a steak dinner,” concluded Stallman.