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Farmers Against Crippling Taxes (FACT) Act Would Repeal Death Tax

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U.S. Rep. Richard Hudson (R-NC) has introduced a bill that would repeal the death tax.

Discussions about the estate tax have died down somewhat since Congress passed the American Taxpayer Relief Act of 2012, which locked in a death tax rate of 40% and a $5-million exemption level indexed to inflation. I think Congress hoped that by passing meaningful legislation, it would placate the growing concern and loud protests from the meager country mice like you and me.

Folks in agriculture, particularly ranching, tend to have our assets tied up in the value of the land, which has greatly accelerated in value recently. When the primary generation passes, the family can be forced to break up and sell portions, or all, of the farm in order to pay the tax obligation. That not only can spell the end of that family operation but often leads to the parceling of the land for development.

J.D. Alexander, former National Cattlemen’s Beef Association president and a farmer-feeder from Pilger, NE, says, “If nothing is done, the estate tax could be the ruin of rural America and small communities.”

I agree with Alexander’s statements, and I believe we must continue to push forward and get the death tax repealed to protect farm and ranch families from falling under Uncle Sam’s grasp.

I’m pleased to hear that one of our elected officials in Washington, D.C., has heard the pleas from rural America and is taking action. U.S. Rep.Richard Hudson (R-NC) has introduced HR 483, the Farmers Against Crippling Taxes (FACT) Act, which would axe the death tax.

“In a struggling economy such as ours, we should be finding ways to let people keep more of their hard-earned money,” Hudson says.“The American people work hard, save, invest, and want to leave future generations with more opportunities and a better life. Unfortunately, the death tax discourages all those traditional American values. It makes no sense for the federal government to punish our farmers and small business owners, the very entrepreneurs who make economic growth and development possible. Their success does not belong to the federal government, and the benefits of their labor shouldn’t be confiscated from their children and grandchildren when they die. The Farmers Against Crippling Taxes (FACT) Act will repeal the immoral and unfair tax burden the federal government heaves upon the American farmer and end the double taxation that threatens family farms, small businesses, and jobs. It is time we recognize the facts of this heinous tax and repeal it once and for all.”

I’m told the bill has already drawn bipartisan support and nearly 60 co-sponsors.

Read more about Hudson’s take on the devastating effects of the death tax in his most recent column here.

Let’s build some momentum on this bill and see if we can get it pushed forward. Call yourelected officials and urge them to back this measure.Express your concerns about the estate tax and howit could impact your family.

What do you think about this bill? Does FACT look like it has the chops to go the distance?

Discuss this Blog Entry 11

Robert Lalor (not verified)
on Mar 6, 2013

The hardest working group in America, the farmers, also frequently have very low earnings but the value of their property is increasing and the government is making it impossible for them to pass it along to their family members.

Anonymous (not verified)
on Mar 6, 2013

Oh, so you want to exempt capital gains taxes. That is what it boils down to. If you sell your farm for a huge profit, you pay a capital gain tax. You want to give your farm to your family members and never pay any capital gain on your profits. That would be like passing on company stock that had been in the family for generations without ever paying a capital gain tax. The inheritance tax is what an estate must pay in order to settle up on capital gains on increases in property values, and reset the basis on that property in future transactions. You get $5 millon exemption. What more do you want?

Clinton Clark (not verified)
on Mar 6, 2013

I have no idea why people think we have to pay higher taxs as most land has already been taxed once or twice before, Must pay why, I as a poor rancher built a Ranch via 30 + years of reinvesting my already taxed money into land ownership though I don't meet the 5 million the Government still will want me to pay Capital gain taxes though not as high, high enough to effect my potential retirement, Government is such a greedy wasteful machine, we all should be embarrassed by its constant consumption of wealth or lack of. Cowboys who worked the land grew old and ended up on the Gov payroll, SS, Disability Medicaid Some of my peers think maybe we were the suckers for acquiring asset where as the guy that never gave it a thought still don't give it a thought, To those who think we Must Pay

Anonymous (not verified)
on Mar 6, 2013

Company stock passes under the same laws as farm property or assets.

I'm just curious if the farm/ag community has considered the impact on "stepped up basis" that repeal would have?

whgf (not verified)
on Mar 7, 2013

Basis gets stepped up because you pay the inheritance tax. Death should not be a taxable event. If the land is sold, that is voluntary, death is not. I don't mind paying a reasonable capital gain if I choose to capture the value of my land by selling it.

The return on land worth $5.0 million is barely enough to support one family in most years particularly if much of the cash flow is reinvested in the ranch to maintain its sustainability. If you pile on debt needed to pay inheritance tax, you have made it very difficult and in many cases impossible to keep the land together for future generations

Remember also that any estate is accumulated with after tax dollars. That's after income tax, self employment tax (over 15%), property tax, sales tax, excise taxes, etc. The same is true for stock in family owned businesses not related to farming. To pay another tax just because I die is just selfish on the part of the government that wastes it and those who believe in the inheritance tax.

Stephen S (not verified)
on Mar 6, 2013

This is a good bill.
Get er done.
It has never been fair for gov't to tax our estates.
They didn't build them, we did.

Anonymous (not verified)
on Mar 10, 2013

No, don't you remember President Obama saying "you did not build that".

Keith Evans (not verified)
on Mar 6, 2013

In calling for an end to inheritance taxes on farm land and other farm and ranch business assets we join the ranks of other wealthy Americans who feel that because of their importance to the economy they should be granted tax exemptions.

We all want lower taxes and more government services for our businesses, but less government spending in most other areas. It has become the American Way.

Keith Evans

Kyle W. (not verified)
on Mar 6, 2013

This will be abused by developers calling themselves farmers or ranchers because they stuck a few raw-boned cows on a plot of land or tilled in some oats to get an agricultural exemption.

A compromise is to use the productive "agricultural value" of the land (exclusive of its value for recreational use or as a future subdivision, etc.) as the basis of the amount subject to the $5mil cap on the inheritance tax as long as it remains exclusively in agricultural production. If it is sold in the future, the basis for capital gain goes back to whatever the original owner bought it for - could be $0 if inherited multiple times. This amount of capital gain then would be subject to the $5mil exemption everyone else gets.

In other words, death tax it only if it is sold, placed out of ag production, or productive value is over the exemption. I think this reflects the importance of keeping ag land in production and feeding the world.

Terry Church (not verified)
on Mar 6, 2013

I believe the death tax needs to be repealed to save farms, ranches and other family owned businesses. The goverment keeps talking about getting the economy back on tract, well this is a good way of starting. Anytime a business or family farm/ranch don't have to sell off what they have just to pay taxes, then they keep operating and putting money back into the economy. The more money put into the economy the more jobs there will be. The more people are working the more income tax and sales tax the goverment will get. Repealing the death tax would be a win, win situation for everyone.

Anonymous (not verified)
on Mar 8, 2013

this is a very important issue. it would help us all to be more effective in our communications with congress and others to have more facts at our disposal. does anyone have some data on things like how many family owned farms/ranches still would be subject to the estate tax given the $5mm exemption,,,and i guess it's $10mm for a couple. we need to know what damage still will be done, how many family owned farm/ranch businesses could be forced to sell or break up even with these new exemption levels.

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