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Death Taxes Still Stalk America's Farm Families
By Carl B. Loop, Jr.
President,
Florida Farm Bureau
Federation
Americans take pride in making life better for their posterity. Like the vast majority of America's farmers and ranchers, I manage my business and nurture my land so they can be handed down -- in better shape than when I first began tending them -- to members of my family.
Modern conservation methods have given me a large degree of control over the physical condition of the agricultural business I wish to pass down to my family. Despite the success I've had in building the fiscal stature of Loop's Nursery and Greenhouses, Inc., the specter of federal estate taxes haunts my ability to fully and fairly bequeath it to members of my family who helped build it.
Last year's Taxpayer Relief Act trimmed estate taxes, helping agricultural producers by increasing the per-person exemption to $1 million by 2006 and creating the $1.3 million family business exemption. While these changes are commendable, they don't go far enough. Lawmakers stopped short of ending the tax that can destroy family farms and other family businesses. To preserve the family-owned tradition of America's farms and ranches, estate taxes, which I call death taxes, must be eliminated.
The death tax is so emotionally charged that last year, I joined more than 70,000 Farm Bureau members nationwide who wrote letters to their representatives and senators calling for its repeal. I clearly see that death taxes threaten my family's ability to carry on the business once I am gone, even though we built it together.
In 1949, after graduating from the University of Florida, I started the nursery business with a $1,500 loan and a borrowed truck. In the early years, my wife, Ruth, and I got by with the help of her teacher's salary. Everything I earned that didn't go to taxes and daily necessities was reinvested in the business. For 49 years, I, along with my wife and children, worked hard to build our family business into one of the largest wholesale nursery operations in the southeastern United States.
I am proud that the nursery has supported my family and sent my three children -- Carol, David and Jane -- to college. David earned his degree in ornamental horticultural and agriculture economics and now runs the family business on a daily basis. My younger daughter, Jane, would also like to come into the business.
Loop's Nursery and Greenhouses grows flowering potted plants and tropical foliage in 350,000 square feet (nine acres) of greenhouses. Warehouses, cold storage and equipment needed to grow, harvest and market our products are also part of the business. Our family business employs between 85 and 100 people year-round.
We believe our operation not only grows a needed product, but makes a positive contribution to our community. In addition to providing jobs, Loop's Nursery and Greenhouses is a community-minded business that provides a stable tax base for city, county, state and federal government. We do not understand why the government wants to penalize us for being successful, especially since we already have paid taxes on what we have earned.
Inflation has increased the value of both our land and equipment to the point that my family would have to sell a sizeable part of the nursery to pay death taxes. This could prove fatal to our business because our assets can't be easily liquidated. Because greenhouses are single-purpose structures, they don't have much market value and the only thing a forced partial sale would accomplish would be to destroy the viability of our business.
My son and daughter want to continue our family business and I would like to pass it on to them. For the last five years, I have been working with attorneys to hammer out a plan that optimizes the property transfer following my death. I have purchased life insurance, recapitalized the business, issued two classes of stock, set up revocable and irrevocable trust agreements, gifted assets, given stock options, and shifted some control of the business. After hours upon hours of worry and large attorney fees, I still don't know if my estate tax plan will save our family business.
It seems to me and my family that Loop's Nursery and Greenhouses is worth much more to our community and the government as an ongoing business, rather than being dismantled for the sake of a one-shot tax payment.
If my family is forced out of business by death taxes, everything I have worked for will be lost, my family will lose its livelihood, 85-plus families we employ will lose their incomes and the community will lose a valuable part of its business base.
My situation is not unique. As vice president of the American Farm Bureau, I talk with farmers and ranchers from across the country. They are concerned death taxes will destroy their family businesses. Many don't know how severely they will be impacted because they don't realize how much their property has increased in value due to inflation. Others understand the consequences but fail to adequately prepare because the law is complicated, lawyers, accountants and life insurance are expensive and death is a difficult subject.
Death taxes can cost farm and ranch families their businesses and lead to hundreds of hours and thousands of dollars in related expenses, but relatively little revenue is generated for the federal government. The estate tax raised a total of about $17.2 billion in fiscal year 1996, as reported by the Office of Management and Budget. That only amounts to a little over 1 percent of all taxes collected by the federal government.
While federal revenues are hardly affected by estate taxes, their potential impact on the future of American agriculture is enormous. Ninety-nine percent of U.S. farms are owned by individuals, family partnerships or family corporations. About half of farm and ranch operators are 55 years or older and are approaching the time when they will transfer their farms and ranches to their children.
At a time when many Americans -- urban and rural -- worry about the
future of the family farm, one simple step could do more than any number
of benefit concerts. Let's kill the death tax and let's kill it now. Not
only the future of Loop Nursery and Greenhouse hangs in the balance, but
also a good portion of America's heritage -- farms and ranches built by
families, owned by families and run by families.
Carl B. Loop, Jr. is a Florida nurseryman. He has served as vice president of the American Farm Bureau Federation and is president of the Florida Farm Bureau Federation.
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This page was last modified Thu Jan 25, 2001 at 04:59 am
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