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Published July 11, 2011, 04:30 AM

Tax on estates can be a burden for many farm and ranch families

WASHINGTON — Out of sight, out of mind is too often the political strategy of many inside the Beltway.

By: Mike Deering ,

WASHINGTON — Out of sight, out of mind is too often the political strategy of many inside the Beltway.

An issue not talked about much lately is the estate tax, or, more appropriately labeled, the death tax. However, when you venture out in rural America, this issue still is a top concern for cattlemen and other small business owners. At the end of 2010 and a few weeks into 2011, the death tax received the attention it deserved from congressional leaders. As you likely remember, in late December, Congress voted — just a few days before the tax reverted back to pre-2011 levels — to reform the estate tax to a 35 percent rate with a $5 million exemption. On Jan. 1, if the estate tax were allowed to revert back to the pre-2001 levels of 55 percent on property valued at $1 million, many farmers and ranchers would have been forced to sell.

In late December, Congress approved the Reid-McConnell tax package that extended personal income tax levels for all taxpayers for two years, maintained capital gains tax rates at 15 percent for two years and included an Alternative Minimum Tax for two years, as well as other business tax incentives. Most importantly, the tax package included death tax relief for the next two years with a 35 percent rate with a $5 million exemption. Had Congress failed to act, then on Jan. 1, the estate tax would have reverted back to the pre-2001 level of 55 percent on property valued more than $1 million, forcing many farmers and ranchers to sell.

Work for reform

This reform, indeed, was a victory for all farmers, ranchers and small business owners. However, the beast isn’t dead; it’s just hibernating for a couple years. This estate tax reform only is good for two years. In 2013, the fate of the death tax and, consequently, the fate of many farm and ranch families throughout the country again will come up for debate. It is vitally important that we continue to force attention to this important issue by contacting members of Congress about this devastating tax and the unintended consequences it will have on you, your family and those employed on your farm or ranch.

It is important to note that a few members of Congress did wake the beast earlier this year with H.R. 1259, the Death Tax Repeal Permanency Act, originally sponsored by Rep. Kevin Brady, R-Texas, and Mike Ross, D-Ark.. More than 90 legislators have cosponsored the legislation so far. Encourage your policymakers to do the same.

This is a real issue in rural American as farmers and ranchers worry endlessly about the future of their land and family. It is a true sign of the disconnect between some members of Congress and the realities of rural America when some argue against estate tax reform and even attempt to make the case to increase this outdated tax.

It is apparent some members of Congress are out of touch with their constituents and the steam engine of economic growth. This is not a tax on the wealthy elite. Let’s remind Congress the estate tax is a tax on the net value of a decedent’s estate, including all personal and business assets, which already have been taxed, before distribution to any heirs. Given that most farmers and ranchers are asset rich and cash poor; this will financially ruin many family farms and ranches.

Tell your story

You can bet your bottom dollar the National Cattlemen’s Beef Association still is walking the halls of Congress to educate elected leaders about the effect this tax has in rural America. Our policy clearly directs us to push for a full and permanent repeal of the estate tax, but more than anything, we are looking for a commonsense solution that doesn’t force farmers and ranchers to liquidate, further depopulating rural America. Telling your story will have an impact. Do not underestimate the value of your voice in Washington.

Editor’s Note: Deering is director of communications for the National Cattlemen’s Beef Association.