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April 2004

Death and Taxes…A Double Whammy for Farm Families

Bob Stallman
American Farm Bureau
By Bob Stallman
President, American Farm Bureau

It’s that time of year again…tax time.

As the old cliché goes, in this world nothing is certain but death and taxes. Unfortunately, this double whammy hits many Americans at precisely the same time in the form of estate taxes, or as we farmers call it – the death tax.

The Hardest Hit

Farm Bureau supports full and final repeal of the death tax. Year after year, Farm Bureau members consistently list it as the organization’s top tax priority because of its potential to prevent families from passing their farms onto their children.

Regrettably, many farm families barely have a chance to mourn the loss of their loved one before they are hit with exorbitant taxes that can force farmers to sell off chunks of their land, the very land that is used for their livelihood.

Farm and ranch estates face heavier and potentially more disruptive death tax burdens than other estates. In the late 1990s, roughly twice as many farm estates paid federal death taxes compared to estates in general, and the average tax paid by farms was larger than what was paid by most other estates. Unlike wealthy Americans who set up trusts and sell off stock to pay estate taxes, farmers lose their land.

Yet, even with that evidence, critics continue to question the authenticity of our convincing case against the death tax. They want victims…

Here is a prime example. Farm Bureau member and Oregon timber rancher Neil Westfall was willed, along with his father and brother, his great aunt’s ranch, valued at around $900,000. During the following 15 years, the Westfalls paid estate taxes totaling $750,000. Later, upon Neil’s father’s death, the Westfalls shelled out another $200,000 to settle the estate for a grand total of $950,000 – $50,000 more than the original worth of the ranch! In effect, the Westfall family ended up buying from the government their fourth generation ranch that was given to them.

There are more examples of farmers like Neil Westfall. Unfortunately, that doesn’t appear to be enough for a number of powerful and wealthy Americans who fare better with a death tax in place.

Some Don’t Get It

I recently read a parable by Bill Gates, Sr., (you may recognize his name, his son is the founder of Microsoft). In his parable, Gates told of two souls in line for birth who were told one would be American and one would not. God asked them to think about how much of their accumulated wealth they were prepared to give back at the end of their lives to earn that right. Gates suggested the correct answer was all of it, saying, “that’s what its worth to be an American.”

Gates and his group, Responsible Wealth, believe the tax promotes equality and supports democracy by slowing the accumulation of wealth and power in the hands of the few. They argue that 98 percent of Americans pass their estates on tax-free, and that all the estate taxes in 2000 were paid by Americans with estates larger than $5 million. Tell that to Neil Westfall.

Gates has repeatedly publicly attacked the Farm Bureau for its stance on repealing the death tax. He suggests that farmers are being used, held hostage by advocates of the repeal. He has gone as far as to insult the intelligence of farmers by suggesting they are not informed about the issue. I bet Mr. Gates would be hard pressed to find a group of Americans more informed about the unjust consequences of death taxes than those farmers living its ramifications.

For myself, along with the farm and ranch families of Farm Bureau, being American does not mean forfeiting the family farm to the government. Instead, it is knowing that every American can contribute to their country without being penalized for their hard work and success. It is the reassurance that when our life on Earth is complete, our years of hard work and way of life will be passed on to our children so that they can follow in our footsteps, just as many of us followed in our parents’ footsteps.

For Neil Westfall and other farmers and ranchers, being able to pass along that dream to future generations is what its worth to be an American.