WASHINGTON, D.C. — When the U.S. House voted Aug. 1 to extend the current tax code for another year, the federal estate tax – or the “death” tax – was also extended at its current level of 35 percent for estates worth more than $5 million per individual, or $10 million per couple.

The extension means the death tax would not revert to 2001’s $1 million exemption level at a 55 percent tax rate, as contained in the Senate’s previously approved tax package. But most agricultural organizations – including the American Farm Bureau Federation (AFBF) and National Cattlemen’s Beef Assoc. (NCBA) – and the families they serve are aiming for total repeal of the estate tax.

“The good news is that the House-passed tax package provides a continuation of current estate tax relief through 2013,” said Kent Bacus, associate director of legislative affairs for the NCBA. “NCBA encourages both the House and the Senate to keep the estate tax provision in any final tax package.”

The House vote came days after the issuance of a Joint Economic Committee (JEC) report detailing the financial harm posed by estate taxes to families wishing to pass their small business or farming operation onto their children or other family members. Costs and Consequences of the Federal Estate Tax detailed extensive costs associated with the tax that can be particularly troublesome for farm families, who own 98 percent of the nation’s 2.2 million farms, according to the AFBF.

“With the average age of a farmer being 58 years old, the estate tax creates even a steeper barrier for young farmers and ranchers to take up the profession at a time when farming is already difficult to enter,” said AFBF President Bob Stallman.

“When estate taxes on an agricultural business exceed cash and other liquid assets, surviving family members are forced to sell illiquid assets, such as land, buildings or equipment, to keep their businesses operating. With 88 percent of farm and ranch assets illiquid, producers have few options when it comes to generating cash to pay the estate tax.”

Stallman indicated the AFBF supports permanent elimination of the estate tax. Until that can be accomplished, it supports the House extension of the $5 million exemption. Failure to approve comprehensive tax reform in the form of a new tax code – including the estate tax – would strike a significant blow to farmers and ranchers when the exemption reverts to $1 million in 2013, both Stallman and Bacus said.

“Most farmers and ranchers would trip the $1 million threshold on land values alone,” Bacus said. “Land values are through the roof and all of the assets it takes to operate a farm or ranch, including livestock, farm machinery and more, would hit the majority of farm and ranch families throughout the country.

“We must find permanent relief or risk taking land out of production agriculture, threatening our ability to provide food for U.S. consumers and abroad.

“Farmers and ranchers already face unpredictable conditions such as the weather and input costs, but the tax code should not be an unpredictable situation they should face,” Bacus continued. “Until full repeal of the death tax can be achieved, at minimum, Congress should maintain the current estate tax relief.”

The House tax code legislation is known as The Job Protection and Recession Prevention Act of 2012, or H.R. 8. The estate tax issue lies within the larger tax code package currently dividing the political parties, which is expected to influence this year’s elections. At the heart of the legislation is whether the final tax reform bill will contain or cast aside George W. Bush-era tax cuts for the nation’s top income earners.