'Death tax' can kill a farm or ranch, House panel told

By Whitney Forman-Cook

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, March 16, 2015 - Members of a House Ways and Means subcommittee vehemently disagreed in a hearing this morning on whether the estate tax - which opponents call the death tax - is unreasonably burdensome to farmers and ranchers and if that burden means the tax should be repealed.

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The chairman of the Select Revenue Measures Subcommittee, Rep. Dave Reichert, R-Wash., said that he “consistently hear(s) from local businesses about how this unnecessary tax threatens the livelihoods of families.”

Rep. Richard Neal, D-Mass., the panel's ranking member, agreed that family farmers had “legitimate” concerns about the burden imposed by the tax - he was even open to discussing how his committee could “provide some relief to (those) farmers” - but maintained that the law needed to stay on the books.

The estate tax has been “around since the days of our founding fathers,” Neal said. “It is a legitimate way to fund government operations and prevent concentrations of wealth.”

Brandon Whitt, a seventh-generation Tennessee farmer, doesn't see it that way. He testified that the economic viability of his family's farm - which produces fruits and vegetables, pork and row crops - is threatened by the tax. 

“My father-in-law John is now 72 years old. As we look to the future, we can't help but worry about what will happen when he passes away,” Whitt said. “We are planning now to try to avoid selling more acres to pay the tax.” Whitt is a member of the American Farm Bureau Federation, which put out a news release on his planned testimony.

The National Cattlemen's Beef Association also had one of its members testify against the tax. Bobby McKnight, a seventh-generation Texas cattleman, said “the death tax is a death warrant for far too many businesses.” Even with the best estate plan, McKnight said, he still worries about how a death in the family could force future liquidations or layoffs.

According to a 2011 study by the Tax Policy Center (TPC), the vast majority - 98 percent - of estate taxpayers fall within the top 10 percent of this country's income distribution. In a separate study, TPC established that only 0.1 percent of deaths triggered the estate tax in 2013.

That particularly small figure is likely due to the fact that estate taxes at the time were only assessed on estates worth more than $5.25 million. In 2013, for instance, 2,662 estates were assessed to generate over $14 billion in tax revenue, according to TPC. The IRS says the figure triggering the tax is now $5.43 million.

Rep. Kevin Brady, R-Tex., introduced the most recent iteration of the Death Tax Repeal Act in late February. In a news release, Brady noted that under current law, the government takes a 40 percent cut from a taxable estate when a person dies.

“For many families your ‘estate' is your business or farm - and this big of a tax bill can be devastating,” he said.

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