Coalition For Agricultural Estate Tax Reform

Coalition for Agricultural Estate Tax Reform Lands Lost “Our great-grandfather started out with a 2,000 acre ranch. All we have left now is 30 acres.” - Kristen Hukari, Grower “We struggled to pay the estate tax for 10 years; but had to sell 1/3 of our property to pay the tax. This property had been in our family since the early 20th century and now we’ll never be able to regain it.” - Jerry Haliford, Grower

“When my grandparents died, we had to sell one of my family-owned ranches that had been in our family for more than 25 years. I hope we will not have to sell more when my parents pass on. Our operation is not large by California standards and would likely not be a viable business if it was smaller.” - Joey Gonsalves, Rancher

Legislative Solution: Too often, when farm and ranch families face the estate tax settlement the family has no other choice but to sell off a part or all of the operation. The financial decisions must be made in short order even as the family deals with the loss of a family member. H.R. 3524 would allow the heirs to maintain the family farming operation. “When my father passed on, I had to refinance the ranch for thirty years to pay the tax burden.” - George Fontes, Grower “It is unrealistic to believe that the estate tax is a tax only on the rich … assets of ranching and farming families are tied to the property they own and the product they produce.” - Janice Tosten, Rancher

Hardships Revisited “We’re fourth generation cattle ranchers. Our land has had estate taxes paid on it four times. Is that fair? It’s hard enough to stay in business with government regulations, without having to pay the IRS every generation.” - Shirley Murrer, Rancher

Legislative Solution: The biggest blow is when farm families are forced to re-live estate tax problems in future generations. H.R. 3524 will create greater certainty and continuity from one generation to the next.

Did you know ... Of all estates, farms are 5-20 times more likely to owe the estate tax Estimated 2009 “taxable” farm estates have an average net worth of $7 million Of the $7 million, 85% of the value is farm business assets, primarily farm real estate Estate tax is generally required to be paid within 9 months Farm equity has more than doubled primarily due to increased value of farm real estate - value that does nothing for agricultural production. 1 in 10 farm estates would owe the tax in 2011 Compiled from “Federal Tax Policies and Farm Households” by USDA’s ERS Division

Coalition for Agricultural Estate Tax Reform Production Practices Changed “With the weight of the IRS on our shoulders, my sister and I made a tough decision. We harvested thousands of trees that we didn’t plan on harvesting. 13,157 trees were cut – far more than we would have conceived of harvesting under other circumstances.” - Hannah Tangeman-Cheney, Timber and Cattle Operator

“After the untimely death of my Grandfather; our family had to interrupt a sustainable timber harvest plan. We were forced to quadruple our rate of harvest to meet the demands of the IRS.” - Jack Russ Timber and Cattle Operator

Legislative Solution: Estate tax settlements change operating procedures to the detriment of the business and the environment, particulary in the case of timberland ownership or livestock operations. H.R. 3524 would make such actions unnecessary. “Four years ago one of our orchards was valued at $12,000 an acre. Today it would be valued at more than $30,000 per acre. It’s hard enough for the next generation to successfully farm, the estate tax makes it nearly impossible.” (2006) - Janie Gazman, Farmer and Rural Appraiser

Did you know ... The United States loses 2 million acres of land each year due to urbanization and sprawl. While the estate tax may affect only a small percentage of farmers & ranchers; it affects a large percentage of farm & ranch land. Those farmers who are 55 and older make up close to 58% of owners and control almost 64% of American farmland. Compiled from Environmental Defense Fund publications.

Capital Diverted “My husband and I have spent more than $250,000 on estate tax planning – money that would have been better spent in expanding the business instead of giving to lawyers and insurance companies.” - Janet Kister, Nursery Owner “Our farming operation suffered after paying estate taxes more than 10 years ago. We did not have the necessary capital to upgrade equipment and replenish lost trees.” - Deborah Hunter, Grower “My Dad worked long and hard hours, to build this farm, only to leave us with a huge estate tax debt. We ended up paying $1,380,000 in taxes. We are being penalized for all of my Dad’s hard work, which we have been struggling to pay each year since.” - Judy Botelo, Grower

Legislative Solution: Farm families facing estate tax consequences are forced to spend ten of thousands annually to avoid the problems, purchasing huge life insurance policies or engaging in costly estate planning and restructuring; expenditures that are made at the expense of investing in the business itself. H.R. 3524 would eliminate or greatly reduce such outlays.