|By JANE HOUIN
WASHINGTON, D.C. — Despite their best efforts, agricultural and commodity organizations came up nine votes short in their effort to convince members of the U.S. Senate to bring debate of death tax legislation to the senate floor.
In order to bring debate on the issue to the Senate floor, 60 votes were needed to invoke cloture on the motion to proceed to consideration of H.R. 8, the Death Tax Repeal Permanency Act of 2005. A 57: 41 vote put an end to discussion of a permanent repeal of the death tax in this session of Congress.
“Today will go down in history as the day 41 Senators slammed the door in the faces of America’s next generation of farmers and ranchers,” said Mike John, Missouri cattle producer and National Cattlemen’s Beef Assoc. president. “These are the faces of our children, the faces of hardworking Americans who dedicate their lives to helping the family maintain small rural businesses only to find their efforts squelched by the strong-arm of the IRS at the time of a parent’s death.”
Stating that permanent elimination of federal estate taxes is one of its top priorities, the American Farm Bureau Federation (AFBF) last week issued a letter to senators calling for procedural votes to allow the legislation to be debated on the Senate floor. The proposed legislation would have eliminated the sunset clause in current law so that death taxes would not be reinstate after 2010, said AFBF President Bob Stallman.
“Despite the House of Representatives passing bi-partisan repeal bills time and time again that would effectively terminate this devastating tax, the Senate has decided the issue doesn’t even warrant debate,” John said.
Death tax rates can be as high as 46 percent. In order to generate funds to pay death taxes, heirs often have to sell part of the business, in some cases destroying its economic viability. “Farms and ranches are capital-intensive businesses with assets that are not easily converted into cash,” Stallman said.
“Today’s vote is a blatant vote against ranching and environmental preservation of open spaces,” John said. “While these Senators are fighting traffic on Capitol Hill each day, farmers and ranchers are waking up before the sun rises to responsibly sustain rural landscapes across the United States. But when these families are hit with the death tax, and their land is appraised at skyrocketing levels, the only way out is to sell out.”
For more than 20 years, members of NCBA have been working for full and permanent repeal of the death tax, and the proposed Senate debate and vote on H.R. 8 was considered a key milestone. Current law calls for the applicable exclusion amount to phase-in gradually toward full repeal in 2010. But because of a “sunset provision” in the law, all reforms expire in 2011. Therefore, the death tax will be fully reinstated only one year after repeal.
“Right now, unless we conveniently die in the year 2010, the threat of a crushing tax on our family operations is inevitable,” said John. “For asset-rich and cash-poor agricultural operations like ours, the appraised value of our land is extremely inflated when compared to its agricultural value.
“We have already paid taxes on these assets two and three times over the course of a lifetime. Then suddenly, when there is a death in the family, we are forced to sell off parts of the operation or the entire ranch to pay off tax liabilities.”
In rural America, the estate tax (aka the “death tax”) is considered one of the leading causes of the breakup of multi-generation family farms and ranches according to the NCBA. Permanent repeal of the death tax could be critically important to America’s family farms, ranches, small businesses and the people they employ.
“Thanks to this effort by a minority of the Senate, the families of America’s dwindling farmers and ranchers will be left with no choice but to sell out to developers and leave the cattle business, especially if they die after 2010,” John said. “These 41 Senators basically voted to keep a cap on prosperity in the cattle business by reaffirming the current law, which reverts back to a $1 million exemption at a 55 percent rate in 2011. At these levels, almost every rural operation in America will be directly hit.”
Just ask Colorado rancher and NCBA member R.J. Jolly.
“We were first hit when my great-grandfather died and our family basically had to buy back the ranch they had all worked very hard on for a generation,” said Jolly. “When I was only a child in 1971, my grandfather died suddenly, and we were hit with the taxes once again. Our family had to again borrow money and sell off land just to sustain the family business my father, aunt and uncles had worked to keep intact since they were little kids.”
According to the NCBA, 78 percent of all Americans believe the death tax is unfair, and 88 percent of cattlemen surveyed say that feat of the death tax has changed the way they invest in their own business. Because 97 percent of American farms and ranches are owned and operated by families, the elimination of the death tax is an important step in stimulating the nation’s economy says the NCBA.
“The death tax has been very destructive for generations of my family,” said Colorado rancher and NCBA member R.J. Jolly. “I’ve had a lot of experience with this tax in my life, none of it pleasant. Watching the fruits of the labors of the men and women who came before me get swallowed up by some insatiable wealth redistribution has been very difficult. If I sound a bit bitter about this one, it’s because I am.”
“Today’s vote was a vote against family agriculture by many Senators, but we will not accept defeat, nor will we give up until this unjust tax is terminated,” John said. “The voices of rural America will not be muted in the slightest, only further incensed.”
This farm news was published in the June 14, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.