Ag Policy Blog

Senators Introduce Bill to Repeal Estate Tax

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Farm, livestock and business groups support a bill led by Sen. John Thune, R-S.D., to eliminate the estate tax.

Thune issued a news release about the bill, which included 28 other Republican senators. Senate Majority Leader Mitch McConnell, R-Ky., and Senate Finance Committee Chairman Chuck Grassley, R-Iowa, are among the co-sponsors.

The Tax Cuts and Jobs Act raised the asset exemption on estates to $10 million, but senators each said there were still farms in their states that would be affected by the remaining estate tax at the higher asset level.

Each news from senators emphasized the impact of the estate tax on farmers.

Thune said, “Oftentimes, family-owned farms and ranches bear the brunt of this tax, which threatens families’ agricultural legacies and makes it difficult and costly to pass these businesses down to future generations. This way of life is integral to so many South Dakota families, which is why I remain committed to removing roadblocks for these family businesses, and we can start by repealing the death tax once and for all.”

McConnell added, “It’s the government’s final insult to force grieving families to visit both the undertaker and the IRS on the same day. Our historic tax reform legislation provided major relief from this burden to many Kentuckians – especially those in farming and rural communities. Now is the time for our Democratic colleagues to join us to take the next step to repeal the death tax once and for all."

Grassley said, “Congress ought to do everything possible to encourage family enterprises to get next generations involved and keep the doors open for business,” said Finance Committee Chairman Chuck Grassley. “It’s getting harder all the time to keep a farm or small business in the family from one generation to the next. The estate tax doesn’t serve any purpose except forcing family farms and family-run businesses to waste precious capital on costly tax planning and in too many cases, paying taxes on income or property that have already been taxed once. Rather than sending even more taxes to Washington, D.C, it would be far better to allow family farms to keep this money so they can invest in the rural communities they are located in to create new opportunities.”

Sen. Cindy Hyde-Smith, R-Mississippi, said, “So much of the American economy is based on the success of small businesses, and the death tax only serves to suppress the continuity of too many farms and small businesses. We should permanently end the ability of the IRS to impose this tax and allow new generations to keep family operations solvent and prospering."

Cramer said, “North Dakota farmers and families should not have to posthumously pay for being successful. Honest, hardworking individuals deserve the right to have their affairs handled by loved ones, not the IRS. The Tax Cuts and Jobs Act I supported in the House was a good first step toward ending this unfair taxation, and I hope the 116th Congress will be the time we finally abolish it.”

Under the new law, the current exemption is $10 million in assets with unlimited asset transfers to spouses. Based on 2013 data, the last year of IRS data on 706 Forms is broken down, the legislation would have helped 247 estate-tax payers holding farm assets. That's about 13.5% of taxable estates.

In 2013, there were 1,829 taxable estate returns filed with more than $10 million in assets. In 2011 there were 1,647 such returns.

All told, there were 4,666 tax returns that paid the estate tax in 2013, and 48% of those returns came from four states: California, Florida, New York and Texas.

The IRS updated Form 706 filings bi-annually on a spreadsheet, but the last year of data reported by the agency is 2013.

Those 1,829 taxable estates in 2013 with more than $10 million taxable assets had just under $68.5 billion in total assets reported on the Form 706 for estate returns. Of those assets, about $1.3 billion were listed as farm assets and another $3.6 billion were listed as real-estate assets, equaling about 7.1% of total taxed assets.

Thune's news release noted the bill is supported by the American Farm Bureau Federation, the National Cattlemen’s Beef Association, NFIB, the Associated General Contractors of America, the Family Business Estate Tax Coalition, Policy and Taxation Group and the National Association of Manufacturers.

While focusing on agriculture in their news releases, the senators modestly declined to point out other people they would rescue from the estate tax. Larger owners of stock would likely benefit more heavily than anyone. The 1,829 estates, stocks (both closely-held and public), made up for about $26.37 billion of assets. State and local bonds accounted for $6.7 billion and cash was $5.16 billion. Stocks, bonds and cash combined take up more than 55% of all the property value for the 1,829 estates that held more than $10 million in assets that paid the estate tax in 2013.

Sen. Thune news release on estate-tax legislation: https://goo.gl/…

IRS data on estate taxes: https://www.irs.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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