Thursday, June 7, 2012

Cut to the Chase -- Something Certain

Something Certain
By Glen Cope
Two things in life bring about the most grief when crossing the human psyche: death and taxes. When combined, they become a perfect cocktail of anxiety. While a family deals with the passing of a loved one, lawmakers in Washington, D.C., find it necessary to exacerbate that grief by taxing the occasion.
I have worked from an early age alongside my parents on the farm. From building fence in the heat of the summer to assisting a cow in labor in the middle of the night, it has been a joint effort. Naturally, I have a vested interest in the farm and, in a way, consider myself co-owner, though my name isn’t on the deed. Imagine my frustration when one day my parents pass on and the IRS knocks on my door demanding a sizable portion of what my family has worked so hard to ensure: a better life for the next generation on our farm.
Many times to create a farm large enough to support a family, especially more than one generation, a farmer, or their spouse, has to work off-farm to make ends meet. The goal is to support the family solely from the income generated on the farm. Getting to that point is unreasonable when the parents die and the estate tax is triggered because of high land prices.
Many people in urban areas consider farmers to be rich because of the assets that make up a farm. However, many fail to understand the large amount of debt needed to cover operating costs.
There is real need for a permanent repeal of the estate tax. Farmers in this country are getting older; the average age is 57. Farming is not a glamorous lifestyle that appeals to farm kids graduating from high school or college. They know farming is not an exceedingly profitable venture, especially when considering the long hours needed to make the farm successful. It is easier to find an 8-5 job “in town” rather than continue in their parents’ footsteps. Our society must not stifle their ambitions to return to the farm by imposing an immoral death tax that penalizes achievement.
If Congress does not act, on January 1, 2013, the death tax will revert back to a $1 million exemption; the remainder of the estate’s value will be taxed at a rate of (brace yourself) 55 percent! To put that into perspective, if a farm valued at $3,000 an acre fell under the death tax, only roughly 333 acres would be protected by the $1 million exemption; any further acreage would be taxed for more than half its value. Ironically, in today’s world a 333-acre farm is not likely to support one family, let alone two or three generations that may rely on the farm for their livelihood.
There are events in which taxation arguably should come into play: sales tax, income tax, capital gains tax and taxes that fund our entitlement programs such as Social Security, among others. However, when we take our last breath, the ability for our children to continue farming our land should be certain—not taxed.

(Glen Cope, a fourth generation beef producer in Southwest Missouri, is chair of the American Farm Bureau Federation’s Young Farmers and Ranchers Committee.)

1 comment:

Retirement Solutions said...

The estate tax is currently $5 million. It will not be repealed in 2013, it just has to be renewed, like last time a couple years ago.

The Estate tax was and is about the redistribution of wealth. If you personally have more than $5 million in assets you will be taxed. In our current financial environment, the disparity between the rich and the middle class has never been so large.

The current income tax system is broken. The estate tax is the only equalizer in the mix, and to eliminate it only makes the gap wider.

The scare tactics of such articles are skewed. How many people in our lives PERSONALLY have more than $5 million in assets? Not many if their financial advisors and lawyers are doing their job.