Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.) and Sen. Jon Kyl (R-Ariz.) introduced this week a proposal that would permanently reform the estate tax, a vexing issue for farm families trying to plan for the future.
Long-standing concerns about the tax have intensified in recent months as Congress failed to change existing law, which includes no estate tax at all in 2010, but reverts in 2011 to taxing estates over $1 million at up to 55 percent. The American Farm Bureau Federation estimates such a low exemption level would mean up to 10 percent of farms and ranches whose operators die next year could owe the steep tax.
By contrast, the Lincoln-Kyl proposal would permanently set the estate tax rate at 35 percent with a $5 million exemption phased in over 10 years and indexed for inflation. It would also provide a “stepped up basis” for inherited assets.
The Senators plan to try to attach the proposal to a pending bill focusing on lending to small businesses, though it is, as of yet, unclear if the proposal will gain support of Senate Leadership and be accepted as an amendment to the bill.
In April, NAWG and nearly 30 other farm organizations wrote Senate leaders urging permanent and meaningful estate tax relief. At that time, the groups voiced support for provisions similar to those in the Lincoln-Kyl proposal.
NAWG has long worked with other agricultural groups to press Congress to undertake estate tax reform that instills predictability into the system and takes into account the unique circumstances of family farming operations. NAWG encourages all state association representatives and growers to contact their Senators and express the importance to family agricultural operations of timely action on this issue.