Greed Could Be the End to Estate Tax Reform

Only 30 legislative days remain for Congress to address expiring estate tax code.

In 2006, a vote on a full repeal of the estate tax was close to passing in the Senate. Now, just four years later, the thoughts of a full repeal are distant and now agriculture is hoping rates don't revert to 2001 levels.

On Jan. 1, the estate tax temporarily zeroed out for the year 2010, but unless Congress takes action, the tax will come back next year at its pre-2001 levels with only $1 million exemption and top rate of 55%.

In hindsight, many agricultural groups would accept nothing less than a full repeal four years ago when Republicans controlled the Senate and the White House. In President Bush's election in 2004, he regularly garnered applause from farmers when calling for a full repeal of the death tax.

Now with Democrats controlling both Chambers and the White House paired with budget constraints is proving tough for movement on a crucial piece of tax legislation for American farmers.

Because farm and ranch assets consist mainly of land, buildings, and specialized equipment, these estates may look wealthy on paper, but they include few saleable assets and little liquidity to pay estate taxes.

The National Cattlemen's Association states that 97% percent of American farms and ranches are owned and operated by families, and the tax is considered one of the leading causes of the breakup of multigenerational family farms and ranches.

Heading into this year, the hope from agricultural groups was that a permanent solution to the estate tax would be reached to give farm families more certainty in planning. But with only 30 legislative days left on the Congressional calendar, things don't look promising for a fix.

Worst case scenario - nothing happens and it reverts to the 2001 levels. As for the best - this budget scenario doesn't look friendly. But maybe agriculture could muster enough support for 2009 levels - 45% for estates worth more than $3.5 million (or $7 million for a couple).

Makes you wonder, did agricultural groups get too greedy and ask for too much? The tables have turned and the agricultural lobby can no longer get everything it wants.

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