By MICHELE F. MIHALJEVICH
Indiana Correspondent

WASHINGTON, D.C. — Legislation designed to permanently repeal the federal estate tax is a good step in the right direction even if it doesn’t become law, an official with the National Cattlemen’s Beef Assoc. (NCBA) said.
“(The NCBA) still supports a permanent repeal of the estate tax, but if we’re not able to achieve the full repeal, this is a great place to start negotiating,” said Kent Bacus, NCBA manager of legislative affairs. “One of our biggest concerns is that you still have a Senate that’s not very supportive, so I think it’ll be difficult to get a full repeal. The cards are stacked against them on this.”

At the end of March, Reps. Kevin Brady (R-Texas) and Mike Ross (D-Ark.) introduced the Death Tax Repeal Permanency Act of 2011, which has been referred to the House Ways and Means Committee.

There was no federal estate tax in 2010, but the tax would have returned Jan. 1, 2011, had it not been for a mid-December deal between President Obama and Congress. The agreement extended Bush-era tax cuts and set the exemption amount at $5 million per spouse and the tax rate at 35 percent.
The exemption would have reverted to $1 million and the tax rate to 55 percent had the deal not been reached. The extensions expire at the end of 2012.

While NCBA would preferpermanent estate tax relief, the numbers in the extension plan are acceptable, Bacus noted, adding the agreement also allows for stepped-up basis and spousal transfer.

“If we can’t get permanent tax relief, at these levels, it’s a pretty good deal. We need permanency in the tax code because it’s hard to plan when you don’t know what the tax code will look like. This is a good opportunity,” he said.
The American Farm Bureau Federation (AFBF) also supports the idea of permanently repealing the estate tax, but a tax specialist with the organization doubts legislation will pass the Senate.

“It’s believable that the House could pass a repeal bill because it’s likely there are enough people to get it passed,” Pat Wolff said. “But the Senate side is much more murky. I don’t think repeal is in the cards for this Congress. The President will veto it. The Senate won’t pass it.”

Despite the pessimism, a good vote in favor of the legislation in the House is important, she noted. “We look at this as a step toward repeal, knowing the political realities. But that’s not our goal. We support a permanent repeal.”
Ross, the legislation’s cosponsor, said farmers and others have contacted his office about the estate tax and how it has impacted them.

“We pay taxes all our lives, so it just doesn’t make sense to be taxed again when we die,” he explained in a statement. “I’ve heard from farmers and small business owners all over Arkansas who are concerned that when they die, their loved ones won’t be able to afford the estate taxes in order to keep the family farm or business in their family.

“The death tax is unfair and punishes those Americans who work hard all their lives so they can pass their family business down to the next generation when they die.”

The estate tax is the number-one reason family farms and businesses in America aren’t passed down to the next generation, said Brady, another cosponsor.

“Can you imagine working your whole life to build up a nest egg or family business only to see Uncle Sam swoop in to take more than half of it upon your death?” he said in a statement. “It’s the wrong tax at the wrong time and hurts the wrong people.”

The AFBF’s Wolff said farmers and ranchers should let their legislators know their stance on the estate tax issue. “They need to continue to deliver the message.

They need to act so we don’t have a repeat of last year and have it go down to two weeks before the end of the year,” she explained.