WASHINGTON, D.C. — As the old saying has it, there’s nothing more certain in life than death and taxes.

The estate tax, a federal tax that can take effect after someone dies (hence also the label “death tax”), is also something of a gamble for farmers. Starting Jan. 1, 2013, estates – farms and otherwise – that are passed on to heirs will be taxed at a higher rate and will have a lower exemption amount.

The current exemption amount for estates is $5 million and the tax rate is 35 percent. Starting next year that amount will go down to $1 million and the rate will rise to 55 percent.

“Estate tax is one of those issues that’s supposedly no problem, if the leadership on both sides gets together to deal with it,” said Danny Murphy, president of the American Soybean Assoc. (ASA). “We haven’t had any indication whether it’s close to moving. I think it’s probably going to have to be resolved as part of the ‘fiscal cliff’ negotiations. It’s disappointing, frustrating; it should be an easy agreement.”

According to the ASA, 34 farm groups wrote to Congress this spring expressing support for changes to the estate tax laws. Ryan Findlay, a lobbyist for the Michigan Farm Bureau (MFB) on national legislative issues, is hopeful there will be a tax package before the end of this year.

“I do think there will be some deal, but I think it’s impossible to know what’s going to be in it,” he said. “There’s a lot of issues at play. I just do not see this sliding into 2013. The question is, will the estate tax be included?

“Michigan farmers are looking for two things: one, let’s keep it where it’s at; and, the second task is, let’s put some certainty back into the tax code. We’ve changed the estate tax significantly several times. It’s challenging enough to plan estates as it is. Let’s pick an exemption and rate and make that it for 5, 10 or 20 years.”

Under current law there are 800 farms in Michigan that would be affected by the estate tax. Under rates that would take effect in 2013 without changes, 7,000 farms could be affected. Findlay said that is just for the land and maybe the buildings, but does not include tractors and other equipment, or any type of asset off the farm.

“The value of farmland has increased dramatically over the past five to 10 years,” he said.

Both he and Murphy said Congress probably could make a change retroactive if it happened after the first of January. “I would be surprised if they didn’t make it retroactive as long as they enacted it in the first quarter of the year,” Murphy said. “That’s a point we would certainly make to them.”

Findlay, on the other hand, said there’s been much talk about “revenue raisers; and one of those revenue raisers is the estate tax.” He wonders, if Congress were to pass a change in six months, would it pass up all the revenue by making the changes retroactive?

But, he believes Congress could make such a change retroactive as long as it would benefit the taxpayer.

Kelly Tobin, a tax accountant at Greenstone Farm Credit Services, said he’s been hearing the Obama administration wants an exemption amount of $3.5 million and a rate of 45 percent.

He’s also read the Kiplinger Letter (a publisher of business forecasts and personal finance advice) people believe the $5 million exemption amount will stay in place. They have access to people in Congress for information, Tobin explained. He said he’s working with 10 farmers right now that are well-off and have children who know how to farm.

“If you’re worth $20 million to $30 million, you should consider transferring it now,” he said, adding it’s basically the same whether it’s a gift or inheritance situation, although there are some differences in the taxes.

“There’s not a farm in the state of Michigan that’s worth under $1 million,” he observed.

He said he doesn’t think the estate tax is going to permanently revert to the old exemption amount and rate, but he doesn’t know exactly how it’s going to play out.