As 2012 draws to a close, farmers and ranchers across the nation are awaiting word on the fate of President Obama’s proposed changes to estate taxes.
According to NPR, although most of the “fiscal cliff” debate has focused on income taxes, another battle could be brewing over estate taxes.
Jared Bernstein, an economist for the Center on Budget and Policy Priorities, says the estate tax has likely been overshadowed during the debate because only the richest two in 1,000 estates would be affected by it.
Currently, only estates valued at over $5 million would owe estate taxes. If the president’s proposal is approved, estates valued at $3.5 million and up would be taxed.
The tax rate would also increase 10 percent from 35 to 45 percent.
The plan, according to Bernstein, would bring in an extra $120 billion over the next 10 years.
If no deal is struck in Congress, the estate tax could go up to 55 percent and it could be applied to estates valued at $1 million and up.
Pat Wolff of the American Farm Bureau Federation says many farmers and ranchers are worried about that scenario as family farmers could be affected. She says it’s not unusual for farmers to have about 80 percent of their wealth tied up in the land, which could mean that families could have to sell off a portion of their land to pay the tax.
Advocates for the estate, or death tax say farmers and ranchers would be able to pay the tax in installments in lieu of selling off land to pay the tax.
A decision regarding the estate tax has not yet been reached.