The Senate bill, the Death Tax Repeal Permanency Act of 2012 (S. 2242), was introduced by Sen. John Thune (R-S.D.). The bill is similar to another Farm Bureau-supported, H.R. 1259, introduced in the House by Rep. Kevin Brady (R-Texas). The House bill now has more than 200 co-sponsors.
In a letter to Thune and other sponsors, AFBF President Bob Stallman stated that estate taxes continue to be a problem for the nation’s farmers and ranchers. Individuals, family partnerships and family corporations own 98 percent of the nation’s 2 million agricultural operations. When estate taxes on an agricultural business exceed cash and other liquid assets, the tax can cripple a family-owned farm or ranch and hurt the rural communities and businesses that agriculture supports, according to AFBF.
The Unemployment Insurance Reauthorization and Job Creation Act of 2010 set the estate tax exemption at $5 million per person, with a top tax rate of 35 percent for 2011 and 2012. That legislation also put in place a new provision for 2011 and 2012 that allows the unused portion of a spouse’s exemption to be used by a surviving spouse, and it permanently reinstates stepped-up basis in regard to tax treatment. Legislation is necessary because without congressional action, in 2013, the estate tax exemption will shrink to $1 million per person with no spousal transfer and the top rate will increase to 55 percent.
“This will strike a blow to farm and ranch operations trying to transition from one generation to the next,” Stallman said. “A $1 million exemption is not high enough to protect a typical farm or ranch able to support a family and, when coupled with a top rate of 55 percent, can be especially difficult for farm and ranch businesses.”