By Jessica Domel
Multimedia Reporter
Citing the impact it has on family farms and businesses, U.S. Senate Majority Leader John Thune (R-SD) introduced a bill Thursday, Feb. 13, to officially repeal the estate, or death, tax.
“As a resident of a rural state filled with family farms and ranches, I have made death tax repeal a priority for a long time,” Thune told the U.S. Senate. “I was proud to help secure a doubling of the death tax exemption in the 2017 Tax Cuts and Jobs Act. This doubled exemption has provided certainty to a lot of farms and ranches and small businesses over the past seven years, but the expanded exemption is expiring at the end of this year.”
Under the Tax Cuts and Jobs Act (TCJA), Americans can claim an estate tax exemption of up to $11 million per person or $22 million per couple, indexed for inflation.
If the TCJA provision that expanded the exemption is allowed to expire this year, the exemption returns to $5.5 million per person and $11 million per couple.
Thune’s legislation, which has been filed in previous Congressional sessions, would repeal the tax.
“The death tax is fundamentally flawed both in theory and in practice,” Thune said. “There should be a limit to how many times the government can tax you. The money you leave at your death has already been taxed by the government at least once, which makes the death tax double taxation.”
The estate tax can lead to family farms having to sell off equipment, land or other assets after a loved one dies to pay the government taxes on the estate.
“A farmer might have substantial-looking assets on paper, but the vast majority of that is land and farming equipment. Only a small fraction of it is money in the bank,” Thune said. “On top of that, farmland can often be valued at a level that is inconsistent with its agricultural productivity value. A farmer might have land with a substantial value on paper, but the crop yield on that land could be worth far, far less.”
When family farms, ranches or businesses close their doors, or gates, it impacts more than those involved in that operation. It impacts rural communities and the economy.
“Losing a local farm can hit rural communities very, very hard, especially when that farm or ranch is bought up by an out-of-state business with few ties to the community and limited interest in building it up,” Thune said. “It’s not just those who actually get hit by the estate tax who suffer.”
Thune said many family businesses, including farms and ranches, spend a lot of time and money on estate planning to avoid being hit by the tax.
“That’s time and money that could have gone into building their business, investing in new equipment, hiring new workers, and the list goes on,” Thune said. “Some set aside capital to prepare for the death tax—capital that, again, could go into building up the farm or ranch or hiring new workers for the family business.”
The estate tax accounts for a fraction of government revenue, the majority leader said.
“In fact, there is reason to believe that the government would collect more in taxes if it got rid of the death tax entirely, due to the economic growth and job creation that would stem from its elimination,” Thune said.
According to Fox News, a House counterpart to Thune’s bill will be introduced in the U.S. House of Representatives by Congressman Randy Feenstra (R-IA).
The state’s largest general farm and ranch organization, Texas Farm Bureau (TFB), applauded the reintroduction of the legislation, citing the negative impact the estate tax has on farm and ranch families.
“Repealing the death tax is the most effective way to protect the family farm and ranch legacy,” Laramie Adams, TFB associate director of Government Affairs, said. “The death tax makes it difficult, and sometimes impossible, for family farms and ranches to continue on from one generation to the next without selling off land or equipment. It’s time to protect current and future generations by officially repealing the estate tax. We thank Sen. Thune for introducing this legislation and working on this important issue.”
Yes, let it be so
Repeal it
Absolutely agree if we wish to insure sustainable food production.
Thank goodness for this legislation! Please urge your Senator and Representative to vote for the elimination of the “Estate or Death” tax! Preserve family farms, ranches, and businesses!
Please repeal the future death tax to the same level as the current rate or higher as property values are going up annually.
I AGREE! Thank you for working to take care of the Farmers and Ranchers of this great country!!
Absolutely. Family farms struggle enough. Let’s give them some relief.
Recent explosion in Property Values, even though my heir wouldn’t want to sell the land, he would be forced to sell to pay current Estate Tax. The income from the land is not much over break-even but the market value of the land would force him out of agriculture. Shameful !
The problem with the idea is that it comes with a removal of the step up in basis of assets. That helps people at all wealth levels. So this is trading a tax on the ultra rich for a tax on everyone.