Bill would exempt farms from estate taxes

Death may stop being one of the biggest threats to U.S. agriculture if legislation in the House of Representatives becomes law.

H.R. 3524, the Family Farm Preservation and Conservation Estate Tax Act, would exempt farms and ranches from Federal estate taxes after death of the owner, as long as their ownership stays in the family. The bill’s objective is to keep more farms in production for more years by eliminating their forced sale by heirs to pay estate taxes.

The measure was introduced July 31 by Rep. Mike Thompson of California and is co-sponsored by Rep. Kevin McCarthy of California, Rep. John Salazar of Colorado, Rep. Henry Cuellar of Texas, and Rep. Cynthia Lummis of Wyoming. It is currently in the House Ways and Means Committee.

The bill has been endorsed by a diverse coalition of 28 farm groups, including California’s largest dairy producer organization. In addition, it is also supported by the Environmental Defense Fund and the Public Lands Council.

Outlook for passage of the bill appears good. Josh Rolph, director of national affairs for the California Farm Bureau Federation, believes it is a near certainty that Congress will act on estate tax legislation before the end of this year because current law will phase out the estate tax entirely in 2010, but then reappear in 2011 at pre-2001 levels. Farm groups say returning to old tax levels would severely damage farmers’ ability to pass on a farm or ranch to the next generation.