Death Tax Bill Introduced in Senate

Legislation abolishing estate tax is identical to bill in House.

Published on: Apr 2, 2012

Senator John Thune, R-S.D., has introduced the Death Tax Repeal Permanency Act, S. 2242, which would permanently abolish the federal estate tax. The Senate bill is identical to H.R. 1259 introduced in the House by Representative Kevin Brady, R-Texas. The tax is currently set at a 35% tax rate with a $5 million exemption. However, in 2013, the estate tax rate is scheduled to increase to 55% with a $1 million exemption. However, in 2013, the estate tax rate is scheduled to increase to 55% with a $1 million exemption.

National Cattlemen's Beef Association President J.D. Alexander calls the tax an unnecessary tax on small businesses and farm and ranch families across the country.

Estate tax repeal is getting some notice outside of ag circles.
Estate tax repeal is getting some notice outside of ag circles.

"The death tax is detrimental to the farmers and ranchers who live off the land and run asset-rich, cash poor family-owned small businesses," Alexander said. "Our priority is to keep families in agriculture and this tax works against that goal."

The appraised value of rural land is extremely inflated when compared to its agricultural value. Many cattle producers are forced to spend an enormous amount of money on attorneys or sell off land or parts of the operation to pay off tax liabilities. This takes more open space out of agriculture and usually puts it into the hands of urban developers.

Thune, calls the estate tax destructive, misguided, and inefficient, and he says the economy, small businesses, family farms, and ranches that are expected to be transferred to future generations will benefit enormously from its elimination. Co-sponsor, Senator Mike Johanns, R-Neb., points out that the loss of a family member should not be a taxable event, and Americans should not be forced to sell the family business, farm or ranch just to pay it.

According to a study by Douglas Holtz-Eakin, the former director of the non-partisan Congressional Budget Office, repealing the death tax could create 1.5 million additional small business jobs and decrease the national unemployment rate by nearly 1%.

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  1. Anonymous says:

    “The idle rich are demanding no taxes on their income or their estates and this is ruining America.” Excuse me; clearly you are not familiar with agriculture in this country. American Farmers and the businesses that support them are as far from “idle rich” as you can get. This article clearly states that farmers are asset rich and cash poor. What that means is that the land and equipment hold all of the constant equity in the operation, but the amount of liquidity available at any one time is a mere fraction of the asset value. For example, my family owns and operates an apple, pear, and cherry orchard with a total acreage around 600. The value of the developed orchard ground and equipment is quite large. You must however, understand that the profit margin on the fruit is nowhere near the equity value to the point that if we were to sell the operation today, we would have to borrow money just to pay the capital gains tax on it. “It was thought every generation would then have the same ability to build up their wealth again.” If you sincerely believe that in the onerous regulatory and tax climate that exists today that it is somehow easy for each generation to start from scratch in building a farm operation, you are completely uninformed. As the youngest generation in a farm family looking to get into agriculture, it is extremely difficult to amass the amount of capital required to start farming or to invest in a developed operation. If my father passed away tomorrow, I would not be able to take over his operation BECAUSE of the DEATH TAX. The family would have to sell it just to pay the tax. And by the way, our assets are taxed heavily while we capitalists are alive; the death tax is in addition to the taxes on assets while living.

  2. Anonymous says:

    I would like to know why family farms and ranches cannot be protected from the Death Tax through incorporation and trusts under the existing laws. Can someone please explain that?

  3. Anonymous says:

    Agriculture is a subset of American culture that is distinguished from urban society by the strong extended family structure. Many ranch families I've observed in Arizona, are either related to each other or intermarry amongst each other. All the ranchers in a community may be related to each other either through blood or marriage. Children who grow up in the ranching business tend to be surrounded by a community of their aunts, uncles and grandparents. The traditional family structure is very strong in agriculture as a result, and produces the results you'd expect to see in children from strong, stable families. I see the death tax as something that forces extended families to split apart because it leaves the children too little to inherit and earn a living without working off the farm or ranch. When they reach this point, the "anti's" accuse them of being "hobby ranchers" who suddenly are treated as if they have too many cooties to deserve to not be regulated off the land altogether. Many farms now require foreign labor because the supply of skilled farm labor-such as people who can set up and overhaul baling machines, for example in the US is dwindling. The other big threat to the extended farming family and the future skilled farm labor supply is the ridiculous nanny state rule coming down from OSHA that prohibits children from learning farm skills their parents grew up learning. Agricultural self sufficiency is a well-documented key ingredient in a sovereign, economically stable country. It's a shame our leaders in Washington take our nation's food security for granted and pass laws such as these without considering the unintended long term consequences.

  4. Anonymous says:

    Call it an estate tax. Instead of taxing away wealth from a person when they are alive, taxing an estate after death is preferable. This was set up that way so a capitalist would have more of their assets to use and enjoy during their life time. It was thought every generation would then have the same ability to build up their wealth again. This way there would be no landed gentry, as in Europe, that never lifted a finger on their farm land (never lifted a finger for most anything)and yet derived all their income from it. South America has the 10,000 to 20,000 hectare estates run that way right now. There are enough ways to pass on wealth that any competent tax lawyer could set up for those with the need to pass on assets (trusts, partnerships, LLC's, etc.) The idle rich are demanding no taxes on their income or their estates and this is ruining America.

  5. Anonymous says:

    This destructive tax absolutely needs to be abolished. It is immoral to force a grieving family to pay a massive tax on cash and assets that have already been taxed. On top of this onerous requirement, the amount required is so large that families are often forced sell the family farm or ranch just to pay the death tax. Continuing to force this onto farm families is a sure way to compel the elimination of the American family farm. If my father were to pass away tomorrow, our family would have to sell our operation and assets to pay this tax. It would be the end of our family run and operated Apple Orchard. There is no other way around it, our livelihood would be destroyed.

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