“While nothing in this world is certain except death and taxes, death at least, appears to be less complicated.”
That’s what Representative Michael Burgess, R-Texas, wrote in a recent commentary posted on Forbes. His piece, and many other like it, take on President Obama’s plan to raise the estate tax as part of his latest budget proposal.
Estate taxes would have been much higher on Jan. 1 had Congress not stepped in at the last minute to deal with it. Had they not acted, these so-called “death taxes” would have likely taxed the heirs of the nation’s farmers and ranchers out of business. However, the agreement extended the Bush-era $5.12 million exemption for individuals. Read more here.
Even with this initial agreement, some worried that it wouldn’t be enough to cover farms and ranches.
“For the typical farm, 70 percent of all the investment is in land,” Ron Plain, University of Missouri Extension agricultural economist, said in an article here. “So if you have a father-son operation or siblings farming together, you can very quickly get above that $5 million threshold and face some sizable estate taxes.”
These concerns are now growing rapidly after Obama’s proposal was announced last week, which would reverse of the fiscal-cliff budget deal he signed in January.
Obama’s proposal would instead reinstitute the estate tax in 2018 at 2008 tax rates, according to The Washington Times. It would drop the per-person exemption to $3.5 million and increase the top tax rate to 45 percent.
“As part of the end-of-year ‘fiscal cliff’ agreement, congressional Republicans insisted on permanently cutting the estate tax below those levels, providing tax cuts averaging $1 million per estate to the very wealthiest Americans,” the White House said in its budget. “It would also eliminate a number of loopholes that currently allow wealthy individuals to use sophisticated tax planning to reduce their estate tax liability.”
The proposal isn’t sitting well with many in the agricultural industry and many are acting to protect farmers from the estate tax.
According to the Ocala StarBanner, Representative Ted Yoho, R-Fla., is a co-sponsor of the Farmers and Ranchers Minimizing Estate Regulations, or FARMER Act. The FARMER Act is designed to revise the formula for assessing farms under the estate tax. Yoho’s plan would the land at its market value. Instead, it would levy the estate tax based on its agricultural productivity.
“Family farming is part of America’s heritage, and it must be part of America’s future,” Yoho said in a statement. “Farmers live with the uncertainty of the weather, the economy and, unfortunately, our tax code. This bill allows our high-producing farming and ranching families to carry on their legacy of feeding America.”