According to Benjamin Franklin, death and taxes are life’s only certainties, but for farmers and ranchers, death taxes, also known as estate taxes, are far from a sure thing.
Under current tax law, the tax goes back on Jan. 1, 2013 to a top rate of 55 percent and a $1 million exemption. With such a low exemption, as many as 18 percent of farms and ranches in Utah could owe estate taxes next year, according to the Agriculture Department. That means more than 3,000 farms in Utah could get hit with a 55 percent tax. How would impact your small business?
For most farmers and ranchers, providing the country’s food, fiber and fuel is not just about making a living, it’s our way of life, a way of life we nurture like our plants and animals with the intention of passing it on to our children, grandchildren and well beyond. But for some farm families, federal estate taxes can mean their most recent harvest was their last.
Estate taxes, owed to the federal government by the farm owner’s surviving family members, can hit farm families harder than other small business owners because 86 percent of our assets are real estate-based. When Uncle Sam comes to pay his respects, surviving family members without enough cash on hand may be forced to sell land, buildings or equipment they need to keep their farms or ranches going.
In these circumstances, farm families’ heartache is felt well beyond the borders of our farms, as the rural communities and the businesses we support also suffer when farms and ranches downsize or disappear. And farmland close to urban centers, such as the Wasatch Front, is often lost forever to development when estate taxes force farm families to sell off land to pay the taxes.
A higher exemption and lower rates will give our farmers and ranchers a better chance to remain in business when transferring from one generation to the next. This is why we are calling on Congress to provide an estate tax provision that would increase the exemption level to $5 million, and adjust it for inflation, and reduce the maximum rate to 35 percent.
That may seem like a lot of money, but as high as the value of land and other farm assets are, it in some cases amounts to only the smallest relief.
A vote for estate tax relief is not only a vote for my cattle ranch in Tooele, it’s also one for the Salt Lake City family sitting down for a roast beef dinner Sunday night. A lower rate and higher exemption will help ensure that future generations of growers can continue this tradition. Farm Bureau is working with congressional leaders to protect our farms, ranches and other small businesses from what could be huge tax increase on January 1.
Leland Hogan is President of the Utah Farm Bureau Federation, and a cattle rancher in Tooele County.