Family Farms Targeted in Estate Tax Repeal
Last week, a very important estate tax repeal was underway. The bill to repeal “Death Tax”, HR 1105, was introduced to the Senate and has a great impact on family farms. Announced on Thursday by Sen. Chuck Grassley, the repeal would eliminate an estate tax of up to 40% on all family businesses. The biggest concern is that farms and ranches, which often struggle to remain in business, are taxed too heavily.
One study was mentioned that shows ending estate tax would actually increase tax revenue due to higher investments. Douglas Holtz-Eakin, a former chief economic policy adviser, made note that 1.5 million jobs would be created if the bill was repealed.
Currently, less than 30% of family businesses are able to be passed down to a second generation. These figures worsen, with less than 10% of all family businesses being passed on to a third generation.
Farmers and ranchers are often the first to plan to minimize their death tax liabilities. Substantial sums are used in this process, which hurts struggling farmers even further. A cattleman from Texas, Bobby McKnight, has had his family’s ranch pass to seven generations, but the death tax bill has greatly harmed his business.
McKnight was present at the hearing and states that he has had to cut his staff greatly due to the estate tax. Another farmer from Tennessee was present and states that the tax forced his family to sell a portion of their land, which has now been developed.
According to estate planning experts consulted for this article, the repeal would alleviate the burden of passing on family businesses to loved ones.
Federal estate tax has been in law for over 100 years. The current repeal was passed by a vote of 22-10, but this does not mean the repeal will ever make it to the president’s desk. If the repeal does pass, it would benefit 5,500 families.