Commentary: Fight continues to repeal or reform federal estate tax

Issue Date: April 4, 2012
Josh Rolph

Stories of struggles with tax will help efforts for reform
By Josh Rolph

What would happen if the owner of your family agricultural operation passed away unexpectedly? The looming question for most small and medium-sized farms and ranches is how the estate tax will limit their ability to continue the family farm, far into the future.

The estate tax affects every single farmer in California. Many in agriculture understand this and have made sure that Farm Bureau pursues its policy to repeal or reform the tax.

In December 2010, literally at the last possible minute, Congress reinstituted the estate tax for two years, after an historic one-year reprieve. Now, if Congress fails to act by Dec. 31, the estate tax exemption level will drop from its current $5 million down to $1 million. Everything above that amount will be taxed at 55 percent, raised from the current 35 percent top rate. This will impact countless California farms and create a doomsday scenario for a family that wants to hold on to the farm, where the only choice is to sell off land to satisfy the tax.

Repeal legislation has been introduced in the House and the Senate. The House is expected to pass a repeal bill this summer, but passage of a repeal bill in the Senate appears virtually impossible. With 60 votes required and no Democratic senator supporting even a $5 million exemption level, the 49 Senate Republicans have no chance to pass repeal—especially because not all Republicans have supported repeal in the past.

President Obama's stated policy is to institute a 45 percent tax rate above the $3.5 million exemption. If reform occurs this year, the Senate will likely pass a bill that falls somewhere between the president's proposal and current law.

Similarly, the agricultural estate tax exemption Farm Bureau promoted in the last Congress does not seem destined to pass the Republican-led House this year. We are therefore in position to support permanent repeal of the estate tax and, if not achievable this Congress, we support the highest exemption and lowest tax rate possible. As we dig deeper into the tax code, there are other reform options for agriculture that are possible in the current political climate.

To make our most effective case, we need your help.

In the past, we've asked Farm Bureau members to send their estate tax stories to us. We, in turn, deliver the stories personally to our congressional delegation, including those members of Congress from other states who play a leadership role on tax matters.

This year, we need even more of these stories to make the case for real reform.

An estate-tax story is one where you share, in your own words, your experience in dealing with the tax, whether in the past, present or anticipation for the future. Stories do not have to disclose private details about the family or specific numbers.

You may fall into at least one of three groups:

1) You have experienced a generational transfer of a farm estate in the past and have settled any estate tax owed to the IRS.

2) You are in the process of paying off the estate tax to the IRS.

3) You have not experienced the estate tax, but expect to in your lifetime.

To make our case most effectively, we need stories from people in each group.

In our last call for stories, we received about 300. However, I'm certain there are more of you who can help. Think how impressive it would be if we were to deliver a thousand or more of your stories to congressional offices. Imagine Farm Bureau President Paul Wenger delivering those estate-tax experiences to Capitol Hill, and further imagine the loud "thud" made when he drops them on their desks.

Please take the time to send your stories about the need for estate-tax reform, anything from a quick email to an essay-length story.

Your stories will be held in confidence, transmitted only to members of Congress. Send your stories directly to me:

Together, we can press for effective relief from this burdensome tax.

(Josh Rolph is director of international trade, farm policy, taxation and plant health for the California Farm Bureau Federation.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.