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By Kenneth Dierschke
Texas Farm Bureau President
Will changes in Congress help Farm Bureau realize its long time goal of eliminating the Federal Estate Tax? Let's hope so. The farmers and ranchers of Texas do not intend to see another Congressional session come and go without positive developments toward the end of the Death Tax. To use the proper name, the Federal Estate Tax is an old nemesis of agricultural producers.
I've spoken of this before, but we know of cases where portions of sizable farms or ranches have been sold to satisfy the Death Tax. That, however, tells only part of the story. Getting Uncle Sam's hand out of your pocket is an expensive business. The compliance details of passing along the family farm can cost thousands of dollars.
Those that favor the Death Tax say that only the "very rich" are affected by it. The trouble is, a ledger sheet can show a larger farm to be worth a great deal—sometimes exceeding the exemptions in the Death Tax. If a family does not have the cash to pay, then the land is parceled and some of it sold.
There are a host of reasons this is wrong. First, estates are accumulated with dollars that have already been taxed. Taxing estates at the death of the owner is double dipping, tax wise, no matter how large the estates might be.
Some of these large farms or ranches contain perfect wildlife habitat and open space land. It's hard to see how selling off smaller portions for subdivisions helps maintain wildlife or the natural environment.
The Death Tax is inefficient and amounts to less than two percent of federal revenues. Even then, it requires approximately 60 cents of every dollar collected to administer and enforce the tax.
The tax stands as a barrier to expansion and perpetuation of farms, ranches and small businesses. President Clinton's Council of Economic Advisers concluded in 1998 that the cost of compliance was roughly equivalent to the amount collected. That's something to think about as we dig deep to pay our estate planners.
The Death Tax is unfair. Many make a strong moral argument against it. No matter how hard you work to build something for your children and grandchildren, the federal government potentially lays claim to part of it. Our farm and ranch families should be free from this burden and from the cost of compliance.
It's time to remind our elected members of Congress, old and new, that Farm Bureau is very serious about this.
Today, the burden of the tax falls squarely on the shoulders of those that can least afford to pay. Under President Bush's tax cuts, the Death Tax exemption is being raised incrementally until it reaches 100 percent in 2010, bringing the tax to zero. That is a worthwhile objective, but it has a trap door. In 2011, the Death Tax will come back in full force, unless action is taken to make the exemptions permanent.
Making that happen is a top priority for Farm Bureau in the 109th Congress. President Bush's reelection and changes in both the Senate and the House give us the best chance we've yet had to end the life of the Death Tax.
