DEATH TAX

NCBA Staff Contact: 

Jason Jordan, Manager, Legislative Affairs
202-347-0228

jjordan@beef.org

Summary
Permanent repeal of the Death Tax is critically important to America’s family farms, ranches, small businesses and the people they employ. The current temporary repeal was a step forward, but because of the sunset provision, the Death Tax will be fully repealed only in 2010. Thus, the Death Tax - with rates ranging from 37 to 55 percent - will be reinstated only one year after it is repealed. This means the Death Tax will continue to force some families to sell an active, successful business when the owner dies.

In the 110^th Congress, NCBA continues to aggressively call for action to ease the Death Tax burden on America’s ranching families:   

·         Reps. Kenny Hulshof (R-Mo.) and Robert Cramer (D-Ala.) introduced H.R. 2380, with 67 original cosponsors on May 17.  Currently, a 10-year phase-out of the Death Tax to full repeal is scheduled to take affect in 2010, but the tax is scheduled to be re-instated in 2011 (back to 2001 levels).  H.R. 2380 makes the repeal permanent.

·         Similar legislation (H.R. 1586) was introduced by Rep. Mac Thornberry (R-Texas) on March 20^th. 

·         As part of the Senate budget resolution, a measure offered by Senator Max Baucus (D-Mont.) could pave the way for future actions that will lessen the burden of Death Tax on ranching families. The Baucus amendment does not actually alter current tax law, but sets aside funds for the Senate Finance Committee to address some form of Death Tax relief within the next five years. The Senate Budget Committee’s Fiscal Year 2008 budget resolution approved previously did not include funding for alterations to the tax code related to Death Tax relief. 

Background
NCBA has worked aggressively to repeal the onerous Death Tax. As a founding member of the Family Business Estate Tax Coalition, NCBA and its family and small business partners worked with Congress to pass legislation to repeal the Death Tax through a phase in of exemptions and total repeal by 2010. Senate rules provide that the repeal is only effective for one year and the Death Tax returns to its current status, unless made permanent, in the year 2011.

On February 5, 2007, President Bush submitted his Fiscal year 2008 budget proposal which, once again, includes full and permanent Death Tax repeal. 

In our work over the past decade on this issue, NCBA has seen some progress and support in the House of Representatives.  But the Senate has continuously failed to pass legislation that would ease this tax burden.  NCBA members are encouraged to make their members of Congress aware of the impact of the Death Tax on America’s family farms and ranches. 

Key Points

• Death Taxes are one of the leading causes of the breakup of multi-generation family beef enterprises. Nearly one-half of the 250,000 cattlemen and women NCBA represents operate businesses that have been in their families for more than 50 years, and 15 percent operate enterprises that have been in their families for more than 100 years.
• This is not a tax on the wealthy elite in America. It’s a death warrant for small-to-medium sized family businesses. The cash-rich can afford accountants and estate planners to help them evade the tax. They amass fortunes and place the money in foundations.  Unlike us, their financial worth does not rest on the value of equipment and land.
• The temporary nature of the Death Tax repeal provisions creates numerous problems for family farms, ranches and businesses. The uncertainty surrounding ultimate repeal will require business owners to continue with estate-planning strategies that are costly, cumbersome and time consuming.
• In an asset-rich and cash-poor business like ranching, the appraised value of rural land is extremely inflated when compared with its agricultural value.
• If Congress were to permanently repeal the Death Tax, these estate-planning resources would be reinvested directly into these businesses, thus creating new job opportunities and providing a much-needed boost to local economies.
• 97 percent of American farms & ranches are owned and operated by families, the elimination of the Death Tax is an important step in stimulating the nation’s economy.
• The Death Tax is an unfair tax on American values and the American dream. The death of a family member should not be a heyday for the IRS.
• Surveys show that 78 percent of all Americans believe the Death Tax is an unfair tax. Among cattlemen surveyed, 88 percent say that the fear of Death Taxes has changed the way they invest in their own business.