NCBA is a member of a national coalition working toward meaningful and permanent estate tax reform. The coalition recently sent a letter to leaders of the U.S. Senate suggesting estate tax reform is necessary to provide certainty for farm and ranch families.

Estate tax rates for 2010 are zero, but unless Congress takes action, the tax will come back next year with only a $1 million exemption and a top rate of 55%. NCBA and the coalition support permanently raising the exemption to $5 million per person and setting the top tax rate at no more than 35%. The groups also have requested indexing the exemption to inflation, allowing for spousal transfers and including a stepped-up basis.

“The 2011 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,” the letter to U.S. senators stated. “The current state of our economy, coupled with the uncertain nature of estate tax liabilities, makes it difficult for family-owned farms and ranches to make sound business decisions.”

Farm estates are 5 to 20 times more likely to incur estate taxes than other estates, according to the USDA Economic Research Service (ERS). It is estimated by ERS that 1 in 10 farm estates with sales of $250,000 or more annually are likely to owe estate taxes for 2009.

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