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September 4, 2000

Vol. 79,  No. 16 

Death tax opponents vow veto override

American Farm Bureau Federation President Bob Stallman last week blasted President Clinton's veto of the death tax elimination bill. The farm leader called the president's decision a "blow to America's hard working farmers and ranchers" and urged Congress to override "this shortsighted decision."

"The families of deceased farmers and ranchers are the people who will be forced to choose which pieces of the family farm or ranch they must sell to pay Uncle Sam's unfair death levy," Stallman said.

Clinton carried out his veto threat of the Republican-authored bill on Aug. 31. The House Republican leadership immediately scheduled a vote to override the veto on Sept. 7.

House speaker Dennis Hastert (R-Ill.) at a South Carolina farmers market urging President Clinton to sign legisltation ending the death tax, which Clinton vetoed a week later.

The tax's impact on farm and ranch families has been at the center of the Republican call for a phase-out of the death tax in 10 years. Montana rancher Lynn Cornwell drove the bill via tractor to the White House on Aug. 24 while House Speaker Dennis Hastert (R-Ill.) headed South generate grassroots pressure on the president at a farmers market in Columbia, S.C.

The original legislation passed the House, 279-136, and the Senate, 59-39. Neither margin exceeds the two-thirds vote required to override a veto. But the House Republican leadership has predicted that all members of their party will vote to override the veto--and that they will gain nine more votes from members that were not present the day of the original vote. While 65 Democrats supported the House bill, concern exists over whether those members will now change their vote.

If the override is successful, the bill would reduce all estate tax rates by about 15 percent over 10 years and lower the bottom effective rate from 37 percent to 18 percent immediately. In 2010, death taxes would be eliminated and up to $5.6 million of assets would retain "stepped-up basis." The stepped-up amount would be indexed to increase automatically at the rate of inflation.

Farm Bureau and other estate tax repeal backers have long argued that the death tax is actually a double taxation that forces family farmers and small businesses to sell their property to pay Uncle Sam when a family member dies. The added cost of estate planning is also an undue burden—especially for farmers dealing with the worst commodity prices in decades, said Pat Wolff, an American Farm Bureau Federation senior director of governmental relations.

"The death tax affects every farmer because 'Joe Farmer' doesn't know when he's going to die and what his estate is going to be worth when he dies," said Wolff. "So…farmers are forced to implement estate tax planning—that takes accountants, attorneys and life insurance. That's expensive and some farmers just can't afford it."

The president and many congressional Democrats have criticized the estate tax repeal legislation as a "budget-busting bill" that provides a huge tax cut for wealthy Americans at the expense of working families. Critics also maintain that only about 2 percent of estates are subject to the tax each year. They offered an alternative to immediately ease the tax for small businesses, but keep it on the wealthiest estates.

But Wolff said that the targeted relief proposal is similar to the failed family business estate tax exemption Congress passed in 1997. "It didn't work then and it won't work now," Wolff said. "There were too many strings attached. Farmers were afraid to use it and attorneys didn't understand it."

Stallman said that families of America's farmers and ranchers deserve an "all-out repeal of the death tax. The death tax is one that America's farmers and ranchers should not have to live with."

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