Ag Groups Push for Estate Tax Fix

Several years ago a permanent repeal to the estate tax was within the realm of possibilities. Now after a dwindling economy and switch in political power on Capitol Hill, ag groups are just hoping for a permanent fix that can limit the burden often placed on farming families after death.

On Jan. 1, the estate tax temporarily zeroed out for the year 2010, but unless Congress takes action, the tax will come back next year at its staggering pre-2001 levels with only $1 million exemption and top rate of 55%. Last week a total of 29 agricultural organizations sent a letter to Senate Majority Leader Harry Reid (D-NV) and Republican Leader Mitch McConnell (KY) requesting their support in establishing permanent and meaningful estate tax relief.

In the letter, the groups stated they support permanently raising the exemption to no less than $5 million per person and reducing the top rate to no more than 35%. The groups also stated the exemption be indexed to inflation, provide for spousal transfers and include the stepped-up basis.

"Family farmers and ranchers are not only the caretakers of our nation’s rural lands but they are small businesses, too," the letter stated. "The 2011 change to the estate tax law does a disservice to agriculture because we are a land-based capital intensive industry with a few options for paying estate taxes when they come due. The current state of our economy, coupled with the uncertain nature of estate tax liabilities make it difficult for family-owned farms and ranches to make sound business decisions."

The groups urged Congress to immediately pass permanent estate tax reform, which they stated “provides the greatest relief and certainty for agriculture” and helps “strengthen the business climate for family farmers, ranchers and growers while ensuring agricultural businesses are passed to future generations.”

The National Cattlemen's Beef Association and the Public Lands Council also state they continue to support an agriculture exemption from the estate tax. The groups state farm estates are 5-20 times more likely to incur estate taxes than other estates, and it is estimated that one in ten farm estates (farms with sales of $250,000 or more annually) are likely to owe estate taxes in 2009, according to the USDA Economic Research Service.

The letter was signed by: American Farm Bureau Federation; American Farmland Trust; American Mushroom Institute; American Sheep Industry Association; American Soybean Association; American Sugar Alliance; Farm Credit Council; National Association of Wheat Growers; National Cattlemen’s Beef Association; National Corn Growers Association; National Cotton Council; National Council of Farmer Cooperatives; National Farmers Union; National Grange of the Order of Patrons of Husbandry; National Milk Producer Federation; National Pork Producers Council; National Potato Council; National Turkey Federation; Northwest Dairy Association; Public Lands Council; Southeast Dairy Farmers Association; Southeast Milk Inc.; United Egg Producers; United Fresh Produce Association; United Producers; U.S. Apple Association; U.S.A. Rice Federation; Western Growers Association; and Western United Dairymen.