A diverse group of U.S. agricultural interests today urged Congress and the Obama Administration to act swiftly to reform the estate tax to protect the nation’s farms, ranches and small businesses.
Speaking at the National Press Club in Washington, D.C., 10 farming and ranching representatives called for lawmakers in the lame-duck session to reform the estate tax law before Jan. 1, 2011, when it reverts to pre-2011 levels. That means an estate worth more than $1 million would be taxed at a rate of 55%. For 2010, the tax rate is at 0%.
Several speakers at today’s news conference said current law would force many farm and ranching families – who are often asset-rich but cash-poor -- to sell off their single largest asset, their farmland, to pay the estate tax.
"That would have a devastating effect" on farms and ranches, said Taylor Slade, a North Carolina cotton and peanut farmer representing the National Cotton Council.
Slade, whose family’s operation has been in business since 1722, emphasized that farming is a land-based, capital intensive industry with few options for paying estate taxes when they come due.
Among those calling for Congress to act was Virginia dairy producer Billy French, who said the uncertainty in the estate tax law makes it impossible for farm families like his to plan for the future. "The uncertainty is holding us back" from the ability to transfer the family business to the next generation, French said.
"I especially don’t like the position we are in in 2010 without the stepped-up basis," said French. "Without it, paying the estate tax on the current value of land assembled by generations before us will be very hard to do in this dairy economy."
"Families like ours in this situation often have to sell land to pay estate taxes," French added. "That's no way to help maintain the family farm that is the backbone of U.S. agriculture."
The group also emphasized that the estate tax is not a tax on the wealthy, and that the nation’s farms and ranches provide a safe, nutritious food supply and jobs.
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. Some, including the American Farm Bureau Federation (AFBF) and the National Cattlemen’s Beef Association, support an estate tax reform that would permanently increase the exemption level to no less than $5 million per person and reduce to the top tax rate to no more than 35%.
Another proposal, offered by Sen. Dianne Feinstein (D-Calif.), is the Family Farm Estate Tax Deferral Act, which would exempt family farms and ranches from the estate tax and update estate tax incentives for voluntary, permanent protection of lands with conservation values.
The death tax is considered one of the leading causes of the break-up of multi-generation family farms and ranches.
"It’s time to put death taxes to rest," said AFBF President Bob Stallman.
"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," Stallman added.
Also participating in today’s news conference were: the American Soybean Association; the National Association of Wheat Growers; the National Cattlemen’s Beef Association; the National Corn Growers Association; the National Farmers Union; the National Pork Producers Council; and the Public Lands Council.