The
Issue: Estate Taxes
Estate taxes -- the death
tax -- can destroy family-owned farms and ranches.
Background:
Individuals, family partnerships
or family corporations own ninety-nine percent of U.S. farms. Death taxes
threaten the continuation of these family-owned agricultural
operations.
Death taxes can destroy
family-owned farms and ranches when the tax, which can be as high as 55
percent, forces farmers and ranchers to sell off land, buildings or
equipment otherwise needed to operate their businesses. When farms and
ranches disappear, the rural communities and businesses they support also
suffer. Farmland located close to urban centers is often lost forever to
development when death taxes force farm families out of
business.
While estate planning is sometimes
effective in protecting farm businesses from over-burdensome death taxes,
estate planning tools are costly and require resources that could be
better used by farmers and ranchers to operate and expand their
businesses.
Legislative
History:
In June the House of
Representatives approved H.R. 8, the Death Tax Elimination Act of 2000.
The bipartisan vote was 279 to 136 with 65 Democrats supporting the
measure. H.R. passed the Senate in July, 59-39. Nine Democrats voted for
the measure. The President vetoed the bill in August. The House failed to
override the vote 274-157 on September 7.
AFBF Policy:
Farm Bureau supports elimination
of death taxes. Until this is accomplished, we support lowering estate tax
rates, increasing the estate tax exemption to at least $5 million and
indexing the exemption for inflation. We support unlimited special use
valuation adjustments and an increase in the gift tax
exemption.
Farm Bureau supports the
continuation of "stepped-up" basis-which adjusts the value of property for
inflation at death. Without this adjustment, farmers could pay high
capital gains taxes making it more difficult for land to be sold to
beginning farmers and farmers wanting to expand their business.
Action:
Death taxes should be
repealed.
Updated September 2000
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