5 Aug 2012 - Again, death to the death tax

There is a growing concern among farm and ranch families over the lack of Congressional action on the inheritance or death tax issue. In the mind of Nebraska rancher, J.D. Alexander, President of the National Cattlemen’s Association, it is at the top of the priority list for the NCBA. In a lengthy conversation with J.D. at the Cattle Industry Summer Conference in Denver last month, he said people must be reminded and be aware of what happens January 1, 2013 if Congress does not act, so let me share his reminder.

Under current law, if Congress does not act, the estate tax exemption will drop from the current $5,120,000.00 per spouse to $1,000,000.00 and the tax rate will jump from 35% to 55%! That means if you are the sole owner when you die and your estate is valued at $3,000,000, your heirs will pay a tax of $1,100,000! If one of the heirs wanted to continue operating the farm or ranch, it would be impossible because the tax obligation would probably require selling most of the property.

So now I hear you say you are not a millionaire and it will not affect you. Think for a moment of current land values; over a thousand acres of Illinois farm land sold at $9,800.00 an acre last month and if you bought just 300 acres, the value would be $2,940,000.00 and everything over $1-million, taxable at a rate of 55%! We’ve all heard the saying…“Farmers live poor and die rich” and now the government wants over half of it after you have paid taxes on the property every year that you have owned it. It is not a fair tax and should be repealed.

I doubt that will happen, but J.D. Alexander says it is critical that you let your representatives know how you feel and urge them to take action. Most of them will spend August in their home districts campaigning, so talk to them and if you can’t do it personally, e-mail, phone or write. Lack of action on Capitol Hill could be disastrous to your family operation, whether it be a farm, ranch or business in any town or city across the U.S.

One encouraging note, as I was writing this column, the House did vote to extend the current rate one year to the end of 2013. That makes sense to me, because it is all but impossible to get any meaningful legislation in a Presidential election year and it would give us a year to mount a strong “repeal the death tax” campaign.

My thoughts on Samuelson Sez.