Ten agricultural organizations call on Congress to address estate tax

Dec 3, 2010
by WLJ

Representatives from 10 agricultural organizations participated in a press event Nov. 30 calling on Congress to take action on estate tax reform during the lameduck session.

The estate tax was once debated as a means to achieve a more equitable society, said National Farmers Union (NFU) President Roger Johnson. Today, it is often viewed simply as a political device to divide the electorate and fund government programs.

NFU’s policy supports an estate tax rate of 45 percent progressively indexed to higher rates as the value of the estate increases and an exemption level of $4 million for an individual or $8 million for a married couple.

Stable and predictable taxes are necessary for planning and operating all private enterprises, Johnson said. The uncertainty in the estate tax code has negative effects on small businesses as well as farmers and ranchers.

If Congress does not take action on the issue before Dec. 31, the estate tax will revert to a $1 million exemption level and a rate of 55 percent.

“According to the U.S. Department of Agriculture, the estate tax, commonly known as the death tax, is one of the leading causes of the breakup of multigenerational family farms and ranches, and it’s an issue that the 111th Congress needs to address before wrapping up this month,” said Dustin Van Liew, Public Lands Council (PLC) executive director. “If Congress does nothing, in less than one month, farmers and ranchers, land owners and small business owners across the nation will be dealt a blow that many won’t survive.”

Van Liew said there is not a silver bullet approach and there are many commonsense proposals that have been introduced during the 111th Congress. Specifically, Van Liew said PLC supports legislation proposed by U.S. Sen. Dianne Feinstein, D- CA, to exempt land in production agriculture from the estate tax, as well as proposals introduced in the U.S.

Senate by Blanche Lincoln, D-AR, and Jon Kyl, R-AZ, and in the U.S. House by Shelley Berkley, D-NV, and Kevin Brady, R-TX, to in crease the exemption level to no less than $5 million, decrease the tax rate to no more than 35 percent, to index any exemptions to inflation, and to include a stepped-up basis.

Representing National Cattlemen’s Beef Association (NCBA), which hosted the press conference, was Scott Bennett, a junior at Virginia Tech University and an active participant in his family’s cattle operation, Knoll Crest Farm, in Red House, VA. Bennett said he wants to return to his family’s operation but the estate tax is a burden that may make his goal impossible.

“One would think that common sense would prevail and this death [tax] would be reformed in such a way that it allows young people, the next generation, to take over family farms and ranches, which are responsible for providing a safe, abundant and affordable food supply here and across our borders,” said Bennett. “But, here we are only a month away from a death sentence to family farmers and ranchers without any clue about what type of resolve, if any, will move through Congress.”

The estate tax disproportionately hits agriculture.

Ninety-six percent of American farms and ranches are owned and operated by families, and the estate tax is considered one of the leading causes of the breakup of multigenerational family farms and ranches. 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.

“Knoll Crest Farm was started by my great-grandfather, passed on to grandfather, now 76 years young, and primarily operated by my dad and his two brothers. Knoll Crest Farm’s success has relied on risk-taking, passion, innovation, and blood, sweat and tears. My grandfather has attempted to plan around the uncertainty of this tax, but this task is nearly impossible,” said Bennett.

“With a $1 million exemption and a 55 percent tax, we would need to sell most of our assets just to keep part of the operation in the family. This is a death sentence to family farms, ranches and small businesses.”

The other organizations joining NCBA, PLC and NFU in the event were the American Farm Bureau Federation, American Soybean Association, National Association of Wheat Growers, National Corn Growers Association, National Cotton Council, National Milk Producers Federation and the National Pork Producers Council. — WLJ