Commentary: Estate tax policy should protect our food supply
Estate Tax Exemption Amounts (PDF, 13 KB)
I just returned from Washington, D.C., where I joined a cross section of agricultural advocates who were carrying a clear message to Congress: Help preserve and protect our nation's farms and ranches from the ravages of the estate tax by enacting HR 3524.
HR 3524, the Family Farm Preservation Estate Tax Act, was introduced at the end of July, just days before Congress left for its summer recess. Leading up to its introduction, many California agricultural groups worked with Congressman Mike Thompson to develop the language in the bill. Since that time, over 30 California agricultural organizations have endorsed HR 3524 and will actively work for its passage. Many other agricultural organizations from across the United States have joined forces to educate Congress about the debilitating effects thrust upon farm and ranch families when they are forced to deal with onerous taxes, calculated after the death of a family member.
Congress is back from its summer recess, so if there was ever a time for you to take a stand on an issue, that time is now. Let your elected leaders know about the promise HR 3524 offers for our nation's farmers and ranchers. With the estate due to expire in 2010 for one year and then largely revert back to the 2001-2002 levels ($1 million exemption and a 55 percent tax rate on the balance of the estate) the message to Congress is clear: Without estate tax reform we will lose family farming operations and we will continue to erode our ability to produce domestically grown food.
Many of the tax cuts that were developed in 2001 by President Bush, including the estate tax, are set to expire in 2011. The one-year repeal is a bit of a quirk caused by the way Congress arrives at 10-year budget scoring.
With the health care issue paralyzing our nation's Capitol, the political wrangling over estate taxes and what to do for 2010 has yet to begin and there is no unanimity on what to do. Some feel the current ($3.5 million) exemption level and tax rate (45 percent) will be extended through 2010 (President Obama's choice), foregoing the elimination of the estate tax. Others believe there may be some movement to a different exemption level and tax rate, possibly establishing new permanent levels, but final resolution may not occur before the end of this session in December and could go as long as February 2010 and still be retroactive to Jan. 1, 2010.
One thing is sure, however: Congress will make changes to the estate tax and their decision will be driven in part by what they hear from their constituents. Now is the time to write, e-mail, fax or call your congressional representatives to let them know how the estate tax has altered your family farming operations due to a death in your family, or how the challenges of having to prepare your heirs for dealing with the tax have impacted your ability to do business.
The message we carried to Congress was simple. Today, by congressional mandate, the IRS is willing to forego collecting taxes on sales of property as long as all the money is rolled into a new investment (1031 exchange). So with a sale, you can forego taxes to a later date, yet with the estate tax—when there is no sale, just a transfer of title from a family member to another—a tax is calculated and due and payable. Therein lies the impetus for HR 3524: As long as agricultural property continues to be farmed, taxes will not be collected until such time as the property is sold outside the family or for a use other than agriculture.
This is your chance to protect what you and I and past generations have worked so hard to develop on our farms and ranches. Take 10 minutes to write, e-mail or call your representative today. Sign up for our Farm Team Alerts at www.cfbf.com. We will help you make the connections with your congressional representatives.
Let's win this one for our current and our future generations of farmers by making some noise to help our leaders understand that fewer farms mean a reduced domestic food supply. HR 3524 aids in providing food security for our nation and it protects our family farms and ranches.
(Paul Wenger serves as first vice president of the California Farm Bureau Federation. He may be contacted at firstname.lastname@example.org.)
Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.