Rep. Mike Thompson (D-CA) and Rep. John Salazar (D-CO) introduced legislation that would provide farmers and ranchers relief from the death tax. H.R. 3524, the Family Farm Preservation and Conservation Estate Tax Act, would exempt working farm and ranch land from the death tax, as long as the land is kept in production agriculture. Should the land be used or sold for other purposes, a recapture tax would be imposed.
Currently, estates valued at more than $3.5 million, or $7 million for a couple, are taxed at a 45% rate. But if Congress doesn't act to freeze or reduce the estate tax, in 2011, it will revert to a 55% tax on estates worth only $1 million or more.