I celebrated my 25th birthday earlier this week at a small steakhouse in Letcher, SD. While enjoying steak tips and wine, one of our neighbors joined us at our table. We started visiting about the election results, and soon, the sobering topic of the death tax came up. He said his friend ended up paying $2 million in estate taxes in order to save the family ranch after the death of his father. The conversation continued with talk of estate planning, gifting land and putting assets in a trust for the next generation before it’s too late.
The estate tax, otherwise known as the death tax, punishes farm and ranch families, who might be asset rich but are typically cash poor. These families end up buying their land multiple times over in tax fees as each new generation inherits it.
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According to a recent poll on our beefmagazine.com homepage, 36% of our readers are concerned about the estate tax.
Current estate tax relief is set to expire at the end of 2012 with exemption levels dropping to $1 million/individual and the tax rate increasing to 55%. While a permanent and meaningful repeal of the estate tax would be ideal, the National Cattlemen’s Beef Association (NCBA), along with 30 other agriculture groups, supports a minimum of extending the exemption level to $5 million/person with a top tax rate of 35%.
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In a recent press release, NCBA President J.D. Alexander says, “If Congress allows current estate tax relief to expire, it will have a devastating impact on the cattle industry. America’s farmers and ranchers are small business owners who cannot afford to foot the bill for government inaction. 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.
“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. We will continue to make this our top priority until there is certainty in the tax code and rural America is relieved from the devastating effects of the estate tax.”
For those outside of agriculture, talking about a repeal of the estate tax probably sounds foolish, especially in a time when our nation faces an extreme deficit issue and sluggish economy. But if we don’t support our nation’s food producers -- the backbone of this nation’s economy -- the repercussions could be extremely disastrous. It’s critical for all of us to visit with our members of Congress and urge them to repeal the death tax and provide relief for farmers and ranchers. There are other ways to climb out of our financial troubles; taxing hardworking ranch families isn’t one of them.
Are you concerned about the estate tax? How will it impact your family’s operation if the tax levels significantly increase and the exemption goes to $1 million?
