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March 12, 2008 Permanent Estate Tax Repeal: Best Option for FarmersWASHINGTON, D.C., March 12, 2008—Permanent repeal of estate taxes is the best option for farmers and ranchers among reform alternatives being considered, according to the American Farm Bureau Federation. In written testimony sent to the Senate Finance Committee, AFBF explained why federal estate taxes have long been a concern to According to AFBF, farmers and ranchers are particularly sensitive to the estate tax for several reasons. “First and foremost, farm operations typically require substantially more in capital assets to generate $1 in income than other sectors of the economy,” said the group. “A more modest-sized farm operation can pay higher estate tax rates compared to a non-farm business, even if the non-farm estate generated comparable income while the owners were alive.” In addition, said AFBF, the typical farm estate has more capital tied up in fixed assets that are difficult to liquidate. As a result, farm estates often face greater difficulty in making death tax payments compared to other types of estates. “Replacing the estate tax with an inheritance tax or other tax due when a business owner dies will do little to resolve the issues that plague farmers and ranchers under the current death tax regime,” said AFBF. “Taxes still will be owed by surviving sons and daughters who want to continue to farm and many will be forced to sell off parts of their business to settle the debt.” AFBF reiterated its commitment to permanent repeal of estate taxes, but urged Congress to make several immediate changes. Among them: the estate exemption should be increased to $10 million per person and indexed for inflation; there should be full stepped-up basis for inherited assets, the gift tax exemption should be increased to $20,000 and indexed for inflation; and special use valuation adjustments for property should be unlimited. -30- Contacts: (202) 406-3642 (202) 406-3649 |