“Death taxes are a deadly thorn in the side of farmers and ranchers,” says Bob Stallman, American Farm Bureau Federation President. “This unfair tax can force the liquidation of farms that have been in families for generations. Families can be put out of work, farmland can be lost to development and businesses in rural communities can be damaged.”
Reps. Kenny Hulshof (R-Mo.) and Robert Cramer (D-Ala.) are co-sponsors of bipartisan legislation that would make death tax repeal permanent.
Farm and ranches have long faced heavier, potentially more disruptive death tax burdens than non-farm estates. Roughly twice the number of farm estates paid federal death taxes in the late l990s compared to estates in general. The average farm death tax is larger than the tax paid by most other estates, notes Stallman.
“Farmers pay more because they use more assets in their operations,” he notes. He cites land appreciation, increasing farm size and growing mechanization, which have increased the average farming operation's worth. “This means that farmers and ranchers typically have larger estates, not because they are rich, but because their businesses are capital intensive," says Stallman. "That translates into a big enough tax bill to put many farm businesses at risk."
Some argue that a permanent repeal is the only way to end the problems that death taxes cause farmers and ranchers. “The uncertainty of current law, with its temporary repeal, makes estate-tax planning more complicated and costly, and sometimes nearly impossible,” says Stallman.
The current law phases down the death tax through 2009 and eliminates it completely in 2010. However, sunset language in the measure provides for its reinstatement in 2011.
“Passing the Hulshof-Cramer legislation to make death tax repeal permanent will not only help farmers and ranchers after 2009 but will make it easier for them to cope between now and then,” says Stallman.