House passes bill to eliminate estate taxes
Washington—In their first vote on estate tax repeal in 10 years, House lawmakers passed the Death Tax Repeal Act of 2015, bringing farmers and ranchers one step closer to tax reform that will help their families invest in the future and pass their businesses onto the next generation, according to American Farm Bureau Federation President Bob Stallman.
“Farmers’ and ranchers’ assets are tied up in the land, not sitting in a bank. And farm families certainly don’t have cash on hand to pay a double tax at death,” Stallman said in a statement. “This leaves many surviving family members with few options other than selling off part or all of their land to pay estate taxes. Too often, cashing in these assets can cripple their business.”
Many farmers have benefited greatly from previous congressional action that increased the estate tax exemption to $5 million indexed for inflation, provided portability between spouses, and continued stepped-up basis, Stallman noted in a letter urging House lawmakers to approve the repeal bill. Instead of spending money on life insurance and estate planning, many farmers today can expand their businesses, upgrade buildings and purchase needed equipment and livestock.
“And more importantly, they can continue farming when a family member dies without having to sell land, livestock or equipment to pay the tax,” Stallman wrote.
Still, estate taxes continue to be a problem for farmers and ranchers for a couple of reasons. First, the indexed estate tax exemption is still working to catch up with the increase in farmland values over the past several years. Second, the value of family-owned farms and ranches is usually tied to illiquid assets, such as land, buildings and equipment.
“When estate taxes on an agricultural business exceed cash and other liquid assets, surviving family partners have few options other than to sell off farm and ranch assets, jeopardizing the viability of their business,” Stallman explained.