U.S. Sen. John Thune (R-S.D.), a member of the tax-writing Senate Finance Committee, joined Senate Republican Leader Mitch McConnell (R-Ky.), Sen. Mike Crapo (R-Idaho), ranking member of the Senate Finance Committee, and dozens of his Senate colleagues in reintroducing legislation to permanently repeal the federal estate tax, more commonly known as the death tax. Thune’s bill, the Death Tax Repeal Act of 2021, would finally end this purely punitive tax that has the potential to hit family-run farms, ranches, and businesses as the result of the owner’s death.
“I’ve fought hard to repeal the onerous and unfair death tax since I came to Washington, including by leading the effort in 2017 to protect more farm and ranch families from it,” said Thune. “Family-owned farms and ranches, like those in South Dakota, can bear the brunt of this tax, which oftentimes makes it difficult and costly to pass these businesses down to future generations. Agriculture is our state’s top industry, which is why I remain committed to removing roadblocks for these family businesses, and we can start by repealing the death tax once and for all.”
“Kentucky farm families and small businesses have enough to deal with during this pandemic. They shouldn’t also have to worry about an unfair death tax when they pass their livelihoods down to the next generation,” said Senate Republican Leader Mitch McConnell. “Republicans’ historic tax reform helped unleash the best American economy in 50 years, including exempting many Kentuckians from the death tax. Unfortunately, Washington Democrats want to double down on the federal government’s final insult and force more grieving families to visit the undertaker and the IRS on the same day. I’m proud to join Senator Thune to permanently end the death tax and support opportunity for rural families and communities.”
“The estate tax may be the most unfair tax on the books,” said Finance Committee Ranking Member Mike Crapo. “High federal taxes should not prevent a family farmer, rancher or other business owner from passing the business they built onto their children. This unfair tax must be permanently repealed.”
“Typically, farming and ranching operations have large holdings of assets but generate low amounts of cash return,” said Eric Jennings, president of South Dakota Cattlemen’s Association. “A loss of a loved one often results in large estates that do not generate enough income to pay the estate tax without selling part of the operation. It is heartbreaking to see a family have to sell off so much of their parent’s farm or ranch that they are unable to continue the operation they have worked into with the intention of continuing their family’s legacy. Eliminating the estate tax will help insure the survival of family farms and ranches.”
Thune led the Senate’s effort to repeal the death tax while Congress considered the Tax Cuts and Jobs Act (TCJA) in 2017. Although the final version of the TCJA did not repeal the death tax, the law doubled the individual estate and gift tax exclusion to $10 million ($11.7 million in 2021 dollars) through 2025, which will prevent more families from being affected by this tax.
In addition to Thune, McConnell, and Crapo, the bill is cosponsored by U.S. Sens. John Barrasso (R-Wyo.), Marsha Blackburn (R-Tenn.), Roy Blunt (R-Mo.), John Boozman (R-Ark.), John Cornyn (R-Texas), Tom Cotton (R-Ark.), Kevin Cramer (R-N.D.), Ted Cruz (R-Texas), Steve Daines (R-Mont.), Joni Ernst (R-Iowa), Deb Fischer (R-Neb.), Chuck Grassley (R-Iowa), John Hoeven (R-N.D.), James Inhofe (R-Okla.), John Kennedy (R-La.), Roger Marshall (R-Kan.), Jerry Moran (R-Kan.), Jim Risch (R-Idaho), Mike Rounds (R-S.D.), Marco Rubio (R-Fla.), Rick Scott (F-Fla.), Richard Shelby (R-Ala.), and Roger Wicker (R-Miss.).
Thune’s bill is supported by the American Farm Bureau Federation, the National Cattleman’s Beef Association, NFIB, the National Association of Manufacturers, the Family Business Coalition, the Family Business Estate Tax Coalition, the Policy and Taxation Group, the Associated General Contractors of America, the National Taxpayers Union, and many others.
Companion legislation was introduced in the U.S. House Representatives by Rep. Jason Smith (R-Mo.).
“The estate tax disproportionately harms cattle producers because with few options to pay off tax liabilities, many farm and ranch families are forced to make tough choices at the time of death – and in worst case scenarios, must sell off land to meet their federal tax burden,” said National Cattlemen’s Beef Association President Jerry Bohn.
NCBA says an estimated 2,000 acres of agricultural land is paved over, fragmented, or converted to uses that compromise agriculture each day in the United States. With more than 40 percent of farmland expected to transition in the next two decades, Congress must prioritize policies that support land transfers to the next generation of farmers and ranchers. Most farm estate values can be attributed to non-liquid assets such as the fair market value of land, livestock, and equipment.
“As small business owners, environmental stewards, and the economic backbone of rural communities across the country, U.S. cattle producers understand and appreciate the role of taxes in maintaining and improving our nation. However, they also believe that the most effective tax code is an equitable one. For this reason, NCBA ardently supports the Death Tax Repeal Act of 2021,” Bohn said.
“Farmers and ranchers already face unpredictable challenges beyond our control yet persevere to protect our nation’s supply of food, fiber and renewable fuel. The tax code should encourage farm business growth, not add to uncertainty,” said American Farm Bureau Federation President Zippy Duvall. “Eliminating the estate tax removes another barrier to entry for sons and daughters or other beginning farmers to carry-on our agricultural legacy and make farming more accessible to all. We appreciate Senator Thune and Representatives Smith and Bishop for introducing their bills and look forward to working with them to get this important legislation passed.”
AFBF says if the estate tax is not eliminated, instead of spending money to improve their operations, farmers and ranchers, along with all small businesses, will be forced to continue to divert resources to pay for estate planning to account for a shifting and unpredictable tax code.
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