WASHINGTON D.C. — Commodity groups representing grain, dairy, livestock and specialty crop industries last month urged Congress to enact pending legislation in both houses which would permanently repeal the federal estate tax.

Introduced March 28 by Sen. John Thune (R-S.D.), the Death Tax Repeal Permanency Act (S. 2242) would abolish the federal estate tax on small businesses and farm and ranch families across the country. It is identical to the House bill (H.R. 1259), introduced by Rep. Kevin Brady (R-Texas).

The bills have yet to make their way through committee hearings, the next step in the process. A letter in support of repeal was signed by advocates of farming and small business in late April.

“There is strong support for repeal (in Congress),” said Kent Bacus, associate director of legislative affairs for the National Cattlemen’s Beef Assoc. (NCBA), which coordinated the letter to Congress. “The thing is, unless Congress acts (by Dec. 31), the estate tax will revert back to pre-2001 levels (55 percent on estates worth more than $1 million).

“This is why we need to put on the pressure. We can’t be too confident Congress will do anything until it is signed into law.”

The current tax is 35 percent for estates worth more than $5 million per individual or $10 million per couple. This tax rate was established in a temporary tax relief bill passed in 2010 that will expire Jan. 1, 2013. Then, if Congress has not acted, the tax rate will revert back to 55 percent for estates worth more than $1 million.

“If estate taxes are allowed to be reinstated at the beginning of 2013 with only a $1 million exemption and top rate of 55 percent, the negative impact on our industry will be significant,” stated the commodity groups in their letter to Congress. “The 2013 change to the estate tax law does a disservice to agriculture because we are a land-based, capital-intensive industry with few options for paying estate taxes when they come due.”

A lack of cash sometimes results in generational farmland being sold to pay estate taxes, the advocacy groups said.

One-third of the Senate has co-signed the Senate bill for repeal. At this point, Bacus said supporters in the Senate are all Republicans, but the NCBA is working to recruit Democrats to support the bill. In the House, 206 bipartisan signatures are on the bill, which needs 217 votes to pass.

While the bills currently have strong support in Congress, federal estate tax reform is in danger of being overshadowed by income tax reform, Bacus said.

Not-so-strong support?

Leaders of the National Assoc. of Wheat Growers (NAWG) differ in their assessment of the support for repeal in Congress.

NAWG told Farm World its growers support a repeal of the federal estate tax, but such a change is unlikely in today’s fiscal climate. Therefore, NAWG is pushing for a long-term extension of the current $5 million exemption.

“The ever-changing federal estate tax threatens family businesses that have operated for generations,” said NAWG CEO Dana Peterson. 

Similarly, the National Pork Producers Council (NPPC) is pessimistic the estate tax will be abolished, given political pressures in the Senate. “Our pork producers would support repeal, but at least we are pushing for a permanent extension of the (current) rates from 2010. It is more likely than repeal,” said Dave Warner, NPPC spokesman.

Though the federal estate tax does not bring in much revenue, Warner said, he is not certain farmers can expect that any tax relief will be passed this year. He said the Senate likely will not bring it or any of the tax relief measures passed under former President George W. Bush to a vote.

“We’re all going to suffer unless something gets done in the Senate,” Warner said. “We would still urge our producers to contact members of Congress to support the Thune and Brady bills.”

Bacus believes voters can affect the direction of Congress. “Voters have a tremendous opportunity to influence Congress because it is an election year. The entire House is up for reelection. One-third of the Senate is up, and the White House is in play,” he said.

“Whenever there is a town hall meeting, a roundtable discussion, radio or TV interview, it presents an opportunity for farmers and ranchers to make the estate tax an issue. For farmers and ranchers, the rising land values will impact the value of their estates and their taxes.

Bacus believes while discussion and votes may happen before November, meaningful votes will not happen until after the election.

He said phone calls to Congressional members are tallied, and emails and letters are influential, especially personal letters telling how the issue affects the letter writer.

“If your Congressman is supportive of your issue, he or she needs to hear that they’re doing something right. Thank them and remind them why it’s important,” Bacus advised.

Warner said the estate tax works against farmers who would otherwise be able to expand their operations and hire more workers. Other commodity groups are concerned the tax is pushing farmers out of business.

“Our priority is to keep families in agriculture, and this tax works against that goal,” said NCBA President J.D. Alexander. “The appraised value of rural land is extremely inflated when compared to its agricultural value.

“Many cattle producers are forced to spend an enormous amount of money on attorneys or sell off land or parts of the operation to pay off tax liabilities. This takes more open space out of agriculture and usually puts it into the hands of urban developers.”

To track the bill through Congress, go to http://thomas.loc.gov and under “search bill summary and status” type in the name of the bill (e.g., S. 2242).

Bacus recommends voters be well-informed and civil when speaking to Congressional staff or writing letters.