FEDERATION SEEKS SUPPORT FOR ESTATE TAX RELIEF
MONTGOMERY, Ala. -- Alabama Farmers Federation President Jerry A. Newby has asked members of Alabama's congressional delegation to help reform estate tax laws that, if left unchecked, could force the sale of farmland when the death of a family member occurs.
Newby sent letters to Alabama's U.S. Reps. Robert Aderholt, Spencer Bachus, Jo Bonner, Bobby Bright, Parker Griffith and Mike Rogers asking them to join U.S. Rep. Artur Davis of Alabama as co-sponsors of HB 3905, the Estate Tax Relief Act of 2009.
The Federation supports the bill, which was introduced by Reps. Shelley Berkley (D-Nevada) and Kevin Brady (R-Texas). The Berkley/Brady bill now has more than 20 co-sponsors, including Davis.
The bill would increase the estate tax exemption from $3.5 million to $5 million and decrease the estate tax rate from 45 percent to 35 percent over a 10 year period. After that, the tax would be indexed for inflation.
"Estate taxes fall disproportionately on farmers because, on average, 80 percent of farm assets are land based," Newby said. "When estate taxes exceed cash and other liquid assets on hand, surviving family members could be forced to sell land, buildings, equipment and/or livestock to keep their business operating. Rural communities and the businesses they support are weakened when farms downsize or disappear."
Land is not a liquid asset and is the most important input needed to produce crops and livestock, Newby said. The rise in property values means farm estates are more likely than the typical estate to owe federal estate taxes, he said.
"Estate tax reform has been a long-standing priority for our members," said Newby, who is president of the state's largest farm organization. "We believe the Berkley/Brady bill is a step toward providing our farm members with some certainty in estate planning and demonstrates bipartisan support for additional estate tax relief which is critical to the preservation of family farms."
Newby said permanent legislation needs to be passed because changing estate tax laws makes it more difficult to effectively plan for the transition of farms from one generation to the next.
"The average age of farmers and ranchers in Alabama is 57," Newby said. "If something isn't done within the next decade, the chance to keep family farms from being split up and sold for development to pay estate taxes will slip away."