Farm Bureau: Death Taxes Threaten Family Farms

WASHINGTON, D.C., March 21, 2001 -- Many family farms are at risk unless death taxes are repealed, Congress was told today by the American Farm Bureau Federation.

"The impact of death taxes, with rates as high as 55 percent, is so severe that their imposition can destroy farm businesses," AFBF President Bob Stallman testified before the House Ways and Means Committee. "When this happens, open space can be lost, surviving family members can be displaced, employees can lose their jobs and rural communities can lose their economic base."

Stallman reminded the members of Congress that families own 99 percent of our nation's farms and ranches. And, that farm and ranch estates pay taxes at a rate much higher than the population at large. In a 1997 report, USDA estimated that more than 14 percent of the nation's most productive farms would owe federal death taxes.

"Farm Bureau considers the loss of the most productive of our nation's farms and ranches unacceptable," Stallman said. He explained that an increase in the estate tax exemption is not the answer.

"Only repeal can erase the burden and uncertainties of estate tax planning," Stallman said. "Because it is often difficult to predict the future net worth of a farm or ranch operation, many farmers and ranchers feel compelled to spend money for estate planning and/or life insurance. This expense is a drain on ongoing farm operations and for some the cost prohibits estate tax planning. Even with the best of plans, no attorney or accountant can guarantee that the plans farmers pay for will save their farms."

He said excessive tax rates are not the only reason that death taxes are so damaging to farm and ranch operations. Farm operations are capital intensive businesses whose assets are not easily converted into cash. In order to generate the funds that are needed to pay hefty death taxes, heirs often have to sell parts of the businesses. When parts are sold, the economic viability of the farm is destroyed.

"Death taxes can also affect the longevity of farm and ranch businesses while the owner is still alive," the Farm Bureau president said. "Children must decide whether or not they intend to continue the family business. When faced with the realization that their family farm may not survive death taxes, many choose to voluntarily leave farm operations. Without children interested in the business, it is common for farmers to sell. Where there are alternative uses for farmland, land is often developed for other uses and open space is lost.

Stallman said, "Eliminating death taxes is the top tax priority of the American Farm Bureau Federation. Farmers and ranchers and other small businessmen are not alone in their support for death tax repeal. Public opinion polls consistently show that seven of 10 Americans think that death taxes should be repealed. Now is the time for Congress to eliminate death taxes."

American Farm Bureau lobbyist Patricia A. Wolff comments on why "Death Taxes" threaten family farms