President Barack Obama on Monday, Feb. 13, proposed a multi-trillion-dollar budget. The president said the budget is designed to spur job creation and impose higher taxes on the rich. However, National Cattlemen’s Beef Association President J.D. Alexander, a farmer-feeder from Pilger, NE, says the president’s take on the estate tax threatens job creation and punishes the producers of food and fiber.
“President Obama has much to learn about the realities of small businesses and production agriculture. Most of these farm and ranch families are not wealthy. Instead, their value is tied up in the land they work and the equipment they use to provide a safe and affordable food supply for a growing population," Alexander says. "The president's war against the rich will negatively impact farmers and ranchers who are simply trying to feed their neighbors.
"Increasing land values and the rising costs of equipment drive up the value of farm and ranch estates. If allowed to continue, the estate tax will continue to break up farms and ranches across America and will make it much more difficult to meet the increasing demand for food around the world,” Alexander says.
The president's budget proposes an estate tax at a $3.5-million exemption level with a maximum tax rate of 45%. As a result of a last-minute fix passed through Congress in December 2010, the current estate tax exemption level is $5 million/individual and $10 million/couple with a maximum tax rate of 35%. Alexander says the president’s proposed fix isn't a solution but rather a continuation of unnecessary and outdated tax burdens on farmers and ranchers.
“Farmers and ranchers are asset rich and cash poor. Land and machinery doesn't equate to cash unless it's sold. When families are forced to sell off property to pay for the estate tax, the land seldom remains in production," he says. "This outdated tax is escalating the depopulation of rural America.”
Alexander says people need to be aware that Obama’s budget is only a suggestion and the actual budget will be determined by Congress.
“The details are in Congress. We will be engaging members of Congress over the next several months to ensure a permanent fix to the estate tax is achieved,” Alexander says.