Congress should kill estate taxes

So what is this, another attempt to keep the rich rich and the rest of us distraught? Probably, but the spinoff of this measure would help Montana farmers and ranchers. As agriculture goes, so goes Montana.

Montana Farm families that have lived in this state since before it became one are losing their land to inheritance taxes. Consider the following hypothetical scenario.

Ranch A is the fourth generation on the family ranch. For the first three generations, ranching was tough. Drought, poor cattle markets and tough winters all took their toll, but the A family is tough, too. They endured those years, buying land when their neighbors moved on to greener pastures.

Ranching still hangs on drought, poor cattle markets and tough winters, but a new wrinkle has emerged. Montana has been discovered.

A generation ago, land value was mostly a reflection of what the property could produce. Adequate water, winter pasture and the ability to produce hay were all factors. The land price was largely based on how many cow/calves the ranch could carry over a year.

That has changed. Now land values are based, in part, on scenery, trout fisheries and hunting possibilities.

So property that might be worth $500,000 for raising cattle could be worth cattle considerably more for residential development.

The IRS allows appraisal of the land for estate purposes at the lower evaluation provided all heirs agree to continue using the land for ranching for 10 years. Any ranch land sold during that time is subject to being taxed at development - not agricultural - prices.

Inheritance taxes start at 37 percent and go to 55 percent. If an estate tax of 37 percent is levied on the $500,000 agricultural ranch, heirs must pay $185,000.

Most ranches and farms in Montana are marginal at best, income vs. land value. Adding a $185,000 bill to an economically overwrought ranch can force a family off the land, allowing urban sprawl to take one more ugly step. Good ranch land disappears under pavement and concrete.

In Montana, ranchers and farmers suffer most from the estate tax, but we must remember that 91 percent of all businesses in America are family-owned. A full third of those are partially or totally lost to heirs when inheritance taxes come due.

Washington reaps about $23 billion annually from the tax. But it costs more than that in jobs lost to failing businesses, in stultifying incentive and in the continuing conglomeration of smaller companies into corporations big enough to buy Congress.