Death and taxes may be inevitable, but a death tax shouldn't be.
That's why early September will be a crucial time for California's family farmers and ranchers - and not only because harvests will be peaking for many crops. In the coming few days, family farmers will learn whether the U.S. Senate will proceed with plans to eliminate the federal estate tax.
Farmers refer to the estate tax as the death tax because it hits people right after a loved one dies. It complicates - and sometimes prevents - the transfer of a family farm from one generation to the next. But the tax has day-to-day impacts as well, because family farmers often must take costly estate-planning actions to try to avoid the tax's harshest effects.
You don't have to talk to too many family farmers before you hear a story from someone who has been affected by the death tax. These stories are emotional and highly personal.
For example, a fourth-generation rancher in Alameda County, Tim Koopmann, refers to the estate tax as a "dream crusher." Tim's family had to sell off an entire ranch to pay the estate-tax liability when his grandfather died. Twenty years later, when Tim's parents passed away, estate tax payments again forced him to sell off portions of the family's remaining property.
Many families must assume new mortgage obligations, sell or divide their land, just to be able to pay the death tax. Money desperately needed for farm operations must be redirected to mortgage payments and life insurance premiums or to the IRS - all of this while the families grieve for the loss of a loved one.
California's farmers and ranchers have much at stake in the death tax debate. As the nation's No. 1 farm state - and in a state with high land values - farmers here are more likely to be affected by the tax.
The estates of farm families are different than many others: Farm families' assets are held in land, machinery, equipment and buildings. Many farm families have little cash on hand, compared to other business owners and some individuals affected by the estate tax.
People who oppose death tax repeal point to business tycoons and spoiled heiresses as the main beneficiaries. The irony is that the extremely wealthy have the means to shelter their assets by hiring armies of accountants and tax lawyers to divert assets into trusts, foundations and offshore accounts. Farm and ranch families don't have those options, and their homes and businesses often are one in the same.
The death tax harms hard-working American families. It should be repealed, once and for all.
Bill Pauli, California Farm Bureau Federation President
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