FarmPolicy

October 31, 2014

Video: Young Farmer Worries about Estate Tax

Categories: Budget

A recent video from the American Farm Bureau Federation (AFBF) indicated that, “AFBF’s Young Farmer and Rancher Chair Glen Cope explains why the estate tax is such a pivotal issue for the nation’s young farmers and the future of U.S. agriculture.”

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Budget Issues; Farm Bill; Ag Economy; and, Climate

Budget Issues

Kevin Robillard reported yesterday at Politico that, “Senate Finance Committee Chair Max Baucus wants to protect an estate tax reduction from any deal averting the fiscal cliff, according to his hometown newspaper.

“Baucus told the Great Falls Tribune in an interview Sunday that he wants to keep the Bush-era rate for estate taxes in order to protect ranchers and farmers who pass their properties on to their children.

“‘…Baucus is working to preserve a reduction in estate taxes that exempts the first $5 million of an estate’s value for individuals and taxes the remainder at 35 percent,’ the paper wrote, but didn’t include direct quotes from Baucus on the topic.”

Yesterday, in his weekly column, Sen. Mike Johanns (R., Neb.) indicated that, “The estate tax currently provides an exemption for all estates valued at $5 million or less.  Anything valued in excess of $5 million is taxed at a rate of 35 percent when it is passed to beneficiaries. If this tax policy is left unaddressed, those rates will significantly change come January.  The exemption will drop to $1 million, with anything above that taxed at a staggering 55 percent.  A $1 million threshold might seem like a lot, but rising farmland prices are pushing the value of ag operations into the stratosphere. The average price for an acre of farmland has ballooned from $1,503 in 2010 to $2,425 today, according to the University of Nebraska Department of Agricultural Economics. Nebraska’s average farm size is 966 acres. Thus, one could estimate the average farm value based on land alone at more than $2.3 million, well above the lowered exemption.

“Farmers and ranchers, many of whom have had land in their families for generations, should not be forced to pay Uncle Sam more than half the value of their estate. And producers should not be forced to sell land to avoid the impacts of the fiscal cliff. Unfortunately, I’ve already heard from Nebraskans who are facing this very dilemma.”

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