Sixty members of Congress spent Tax Day last week supporting the repeal of the estate tax — a tax, they say, is a major obstacle for family farms and ranches.
The dozens of congressmen — including three from Colorado — wrote in a letter last week that “the tax punishes the hard work and savings of parents wishing to leave behind a better life for their children and it seriously affects family farms and family-owned businesses. This tax only accounts for around 1 percent of federal revenue and we believe it’s an unnecessary tax on America’s job creators.”
Colorado Republicans Cory Gardner, Scott Tipton and Doug Lamborn were among those who signed the letter.
The estate tax issue has attracted plenty of attention in recent years.
Back in 2012, Gardner, Tipton, and Lamborn formally called for the repeal of the estate tax, also known as the “death tax.”
Around that time, a Bush-era estate tax exemption for property valued at just over $5 million was set to fall down to $1 million, and the estate tax rate of 35 percent was set to skyrocket back up to 55 percent. As part of “fiscal cliff” decisions in January 2013, lawmakers agreed to keep the federal estate tax exemption at $5 million, and set the maximum tax rate at 40 percent, which came as a relief for ag producers, for the time being.
But many ag producers, much like the members of Congress who signed the letter last week, don’t want an estate tax at all.
Some call the estate tax the No. 1 killer of family farms.
Given the rapid increases in farmland values in recent years, many farming and ranching families easily exceed the $5 million exemption.
In Colorado and elsewhere, irrigated farmland is valued at as much as $10,000 per acre, meaning that 500 acres — much smaller than the average Colorado farm (at 881 acres) — could amount to $5 million in value by itself. Then there’s valuable farm equipment and other assets to be factored in.
While many farmers and ranchers are land-rich, many are also typically cash-poor, often spending much of their income on input costs — feed, fuel, labor — that can total up to hundreds of thousands of dollars each year.
Many worry that beneficiaries of farm assets that surpass the $5 million exemption could be forced to sell a portion of their inheritance, including some of their ground, just to have enough cash to pay the estate tax bill.