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February 11

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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Death taxes should be repealed.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


This page was last modified Fri Sep 22, 2000 at 10:04 pm

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