Ending the Tax on a Lifetime of Success

Weekly Column

Sen. Mike Johanns

 

Summer after hot, dusty summer, many of our parents and grandparents worked in the fields, raising their crops. Winter after icy winter, they braved frigid corrals, helping to grow their herds. They often worked the same ground for decades—first as children, learning the trade.  Over time, they may have added new land and new equipment here and there—whenever they found an opportunity to expand their life’s work. It takes a lifetime to grow a farm or ranch.
These stories are bountiful in Nebraska. But not all of them have a happy ending. Farmers and ranchers are often vulnerable to one of the federal government’s most egregious policies that can reverse a lifetime of work in an instant, and at the hardest time for a family. The estate tax, or death tax, is a staggering 40 percent tax levied on inherited property following the death of a family member. This tax disproportionately affects rural America because of the cost of owning and operating farms and ranches. The average price for an acre of farmland has ballooned more than 140 percent, from $746 to $2,425 in the last decade, with little sign of slowing down, according to the University of Nebraska Department of Agricultural Economics.
Land is not the only part of the equation. Equipment and structures from center pivots to combines to grain bins can be valued well into the millions of dollars. Indeed the cost to own and operate a farm or ranch requires a substantial investment in land, buildings and equipment, but significant cash to pay the estate tax can be difficult or even impossible to produce. Although the tax exempts the first $5 million of each estate, the remaining tax burden leaves many rural farm families deep in debt. As costs continue to climb, the number of agriculture operations impacted will also increase.
I have met with families over the years who fear the estate tax will take away their family farm—their livelihood and the product of generations of hard work—to pay Uncle Sam after the death of a loved one.
I believe that repealing this tax is in the best interest of our nation’s farmers, ranchers and business owners.  That’s why I am cosponsoring legislation being introduced this Tax Day that would repeal this arduous fee for families in the midst of mourning. The legislation would not only end the government’s twisted idea of a sympathy card, but would do much to give our economy a much-needed boost. Studies indicate that repealing the estate tax would create 1.5 million additional small business jobs, add $119 billion to our economy and boost workers’ income by $79 billion. Similar legislation received bipartisan support during the Senate’s budget resolution debate.
A lifetime of work should not become a tax liability. It’s time we return to the fundamental principle that hard work and achievement is worthy of reward, not penalty.  It’s time we repeal this tax on success.