NCBA Revisits Death Tax

At the Cattle Industry Summer Conference in Reno, Nev., the NCBA Board of Directors approved an amendment to NCBA policy aimed at relieving the Death Tax burden from America’s farmers and ranchers. While NCBA still steadfastly supports full and permanent repeal of the Death Tax, the amendment gives NCBA the flexibility to possibly support a compromise measure, if it is the only way to reduce the uncertainty surrounding the current Death Tax timetable.

The Death Tax is being phased out to full elimination in tax year 2010. But without a change in the tax code, the Death Tax will be fully re-imposed in 2011, using rates and exemption levels that were in place in 2001. Re-imposing the Death Tax at 2001 levels would ignore an entire decade of inflation and land value increases.

“Any compromise would be a tough pill to swallow, because full repeal of the Death Tax is long overdue,” said NCBA President Mike John, a cattleman from Huntsville, Mo. “But it’s really difficult for family farming and ranching operations to do effective estate planning with a re-imposed Death Tax hanging over their heads. We need to remove that cloud of uncertainty, even if the legislation doesn’t include everything cattlemen want.”

The amendment affirms NCBA’s support for full and permanent repeal of the Death Tax. But because the Senate may not be able to permanently repeal the Death Tax, members also recognized the potential need to support an alternative measure as protection against full re-imposition of the tax. This resolution represents interim NCBA policy until it can be considered by the full NCBA membership at the annual Cattle Industry Convention in January, followed by a mail ballot issued to all members.

The House of Representatives has passed a compromise measure that would increase the Death Tax exemption to $5 million per person and $10 million per couple, indexed for inflation, beginning in 2010. It would also reduce the tax rate on estates up to $25 million to equal the capital gains tax rate — now 15 percent, set to increase to 20 percent in 2011. Those rates would double on estates of $25 million or more. Step-up in basis is kept in this package.

John said increasing the exemption thresholds and lowering rates is very important, and this legislation certainly could be an improvement. But the fundamental problem with the Death Tax would remain — it is a disincentive for passing farming and ranching operations on to the next generation.

“Any tax that drives cattlemen off the land and threatens the future of our industry will never have my support,” John said. “We may have to live with these modifications for now, but the Death Tax still deserves nothing more than full repeal.”