Estate Taxes Still Top-Of-Mind For Ag Groups

As floor time runs out, a letter to Congress asks for permanent relief from the estate tax.

Published on: Nov 19, 2012

More than 30 ag groups last week sent a letter to the U.S. House of Representatives and the U.S. Senate urging them to provide farmers and ranchers with permanent relief from the estate tax.

Current tax relief is set to expire at the end of 2012. After Jan. 1, exemption levels drop to $1 million per individual and the tax rate increases to 55%.

Groups signing the letter included the American Farm Bureau Federation, National Cattlemen's Beef Association, and American Sheep Industry Group, among others.

NCBA President J.D. Alexander says that at a minimum, NCBA supports extending the exemption level to $5 million per person and retaining the top rate of 35% until permanent repeal is achievable.

As floor time runs out, a letter to Congress asks for permanent relief from the estate tax.
As floor time runs out, a letter to Congress asks for permanent relief from the estate tax.

"America's farmers and ranchers are small business owners who cannot afford to foot the bill for government inaction," Alexander says. "The fate of American agriculture and our economic recovery rests on there being certainty in the tax code and continued relief from the burdensome death tax."

Uncertainty in the tax code, specifically with the estate tax, creates an unnecessary burden for farmers and ranchers who are forced to set aside valuable resources for estate planning instead of investing in the expansion of their family businesses, NCBA says, adding that more than 96%of American farms and ranches are owned and operated by families, and eliminating the death tax is an important step in stimulating the nation's economy.

The American Farm Bureau has also been a strong supporter of estate tax reform, citing the perceived inability of younger farmers to enter into the business without heavy costs.

"With the average age of a farmer being 58 years old, the estate tax creates even a steeper barrier for young farmers and ranchers to take up the profession at a time when farming is already difficult to enter," said AFBF President Bob Stallman in a press statement earlier this year.

NCBA adds that many ranching families are often land rich and cash poor, with the appraised value of rural land being extremely inflated when compared to its agricultural value. Many cattle producers are forced to spend an exorbitant amount of money on attorneys or sell off land or parts of their operations to pay off tax liabilities, they note.

Stallman also addressed the issue in his previous comments.

"When estate taxes on an agricultural business exceed cash and other liquid assets, surviving family partners are forced to sell illiquid assets, such as land, buildings or equipment to keep their businesses operating. With 88%of farm and ranch assets illiquid, producers have few options when it comes to generating cash to pay the estate tax," Stallman says.

Alexander says NCBA will continue to make the estate tax a priority.

"NCBA stands with our partners in agriculture in urging Congress to act by the end of this year to renew the current estate tax relief until full repeal of the estate tax is possible," Alexander says.