04/20/05 The Death Tax and agriculture

Many a person that owns, operates, or stands to inherit a family business, or is building an inheritance to pass along to their families, is watching with great interest as Congress again this year tries to pass legislation that would completely eliminate the federal estate tax, better known as the Death tax. The reason for the nickname is the tax incurred to heirs of such businesses or inheritances after the primary owner dies. The estate tax repeal debate has gained more of an interest from the American public at large over the years, but in media coverage, one story that perhaps is not told is how agriculture, the family farm, is affected by estate taxes. STALLMAN: America's farmers and ranchers are impacted negatively even more so than a lot of other small businesses because we are capital intensive in terms of our production. We have a lot of land assets. We have a lot of very expensive equipment. When the Death Tax hits, families sometimes have to sell of part of those farms, making them less efficient, making it harder to stay in business and that prevent future generations from carrying on the farming operation. The comments of Bob Stallman of the American Farm Bureau Federation fail in line eerily with numbers used by proponents of estate tax repeal & numbers that include seventy per cent of families selling or cashing out their businesses after the first generation, and only thirteen per cent of family owned businesses surviving past a third generation. But some may say Stallman's comments are political in nature. How does the estate tax really affect a farmer? Ask Kenny Hulshof. He is from a Missouri farm family, a U.S. Representative of that state, and the author of the recently passed House version of the estate tax repeal bill. HULSHOF: I'm the only child of our farm family. For forty-six years, my Mom and Dad not only invested their profits back into this farm, but really their hearts and their souls into this business. And when you are sitting across from your long-time family accountant, and he's plugging in a value for 514 acres, the three tractors we have, the combine, the house I grew up in as a kid, irrigation equipment, and a modest life insurance policy, and I'm in a cold sweat, wondering when he hits that total button on his adding machine, is this business my family has built, is it going to be above or below this arbitrary line Congress has set. More in our next program.