The Clock is Ticking for a Death Tax Compromise
American Farm Bureau
President, American Farm Bureau
There are not many days remaining this year for Congress to accomplish a lot. With high profile issues still on the table, like immigration, energy and too many others to mention, there is one issue that is truly in a make-it or break-it situation.
Estate tax – or the death tax as we farmers and ranchers like to call it – can destroy farms and other businesses at the blink of an eye. But there is finally real hope that a step can be taken this year toward eliminating this erroneous, outlived, burdensome tax. Congress just needs to act now before the clock runs out of time.
Nearing the Twelfth Hour
While a chance of full repeal got swept up in the political game this year, there is a Farm Bureau-supported compromise on the table that would increase the exemption to $5 million per person. The House-passed compromise would take care of many farmers and ranchers, while moving Farm Bureau one step closer to seeking full repeal at a later date.
The question is, are we better off swinging the pendulum toward our goal of full repeal with this compromise, or allowing it to stay still, having to start over from scratch next year?
We need to take this opportunity and make something happen this year. We’ve come entirely too close to let Congress go home without doing anything toward eliminating the death tax.
Beating the Clock
The House-passed death tax compromise provides two benefits that have never before been incorporated in an estate tax bill. Both are significant. The first provision is the inclusion of an inflation index, which would considerably benefit farms and ranches by keeping pace with rising land values.
The second provision stipulates that when a spouse, who did not use his or her $5 million exemption, passes away, and the other spouse will be allowed that exemption. The bill excludes up to $5 million in assets for an individual and $10 million for a couple.
Current law phases out the death tax to a one-year elimination in 2010. But, it’s scheduled to return in 2011 to levels set prior to 2001 with a maximum rate of 55 percent. With permanent repeal completely blocked, this compromise does the next best thing by permanently reducing the tax through higher exemptions and lower rates.
Senate leaders will likely take up the compromise within the month. Seeing that the Senate was shy only three votes this past June to move to a vote on full repeal, I think it signals that this compromise just may have a chance and we could possibly beat the clock.
Congress has a real opportunity to take this first step and pass the death tax compromise, keeping in mind that it is the first step that will help us reach the second.