Indiana Farm Bureau supports federal legislation introduced today in both the House and Senate that would permanently repeal the estate tax. The Death Tax Repeal Act of 2013 is a welcome addition to the accelerated repeal of Indiana’s inheritance tax this year by the Indiana General Assembly. IFB encourages the entire Indiana congressional delegation to support the repeal of the federal estate tax.
While significant relief was enacted last year to help farmers cope with estate taxes, IFB believes that permanent repeal is still the best solution to protect all farms. The legislation introduced today would repeal the estate tax, maintain stepped-up basis and make permanent a 35 percent maximum gift tax rate and $5 million lifetime gift tax exemption indexed for inflation. “Individuals, family partnerships and family corporations own more than 95 percent of Indiana’s 61,000 farms,” said Megan Ritter, IFB director of public policy. “When estate taxes on the family farm exceed cash and other liquid assets, surviving family partners may be forced to sell land, buildings or equipment to stay in business. This can not only cripple the farm operation, but it also hurts the rural communities that agriculture supports.”
The value of family-owned farms is usually tied to illiquid assets, such as land, buildings and equipment. On average, 85 percent of farm assets are illiquid, and therefore producers have few options when it comes to generating cash to pay the estate tax. Recent increases in cropland values, on average 15 percent from 2011 to 2012, have greatly expanded the number of farms that now top the estate tax exemption. “Indiana Farm Bureau believes the estate tax should be eliminated permanently,” concluded Ritter. “We fully support the Death Tax Repeal Act of 2013 and ask our representatives in Washington, D.C., to do the same.”
ccording to Steve Foglesong – past president of the National Cattlemen’s Beef Association – the estate tax is a prime example of bad tax policy. He says it’s essentially a death warrant for small-to-medium sized family businesses. While significant tax relief was enacted last year to help farmers cope with estate taxes – Farm Bureau believes permanent repeal is the best solution to protect all farms and ranchers. NCBA is also fighting for full and permanent repeal of the estate tax. Farm Bureau President Bob Stallman notes individuals, family partnerships and family corporations own 98-percent of the nation’s two-million farms and ranchers. Farm Bureau notes the value of family-owned farms and ranches is usually tied to illiquid assets. With 85-percent of farm and ranch assets illiquid – the group says producers have few options when it comes to generating cash to pay the estate tax. When estate taxes on an agricultural business exceed cash and other liquid assets – Stallman says surviving family partners may be forced to sell land, buildings or equipment needed to keep their business running. Not only can this cripple a farm or ranch operation – Stallman says – but it hurts the rural communities and businesses that agriculture supports.