House Votes to Keep Family Farms in the Family
Death Tax Repeal Would Remove 60 Percent Penalty on Business Passed to Next Generation
With 279 to 136 approval, the U.S. House of Representatives voted Friday afternoon to remove the high-cost tax liability imposed when the owner of a farm or ranch dies and leaves the operation to surviving family members. The penalty can run as high as 55 percent with an added 5 percent surcharge — imposed for merely inheriting the family business.
"The Death Tax Elimination Act" (H.R. 8) would begin a reduction of the tax immediately and eliminate it completely in 2010.
"Repeal of the Death Tax means the next generation of young farmers and ranchers may inherit what is rightly theirs, instead of having to consider selling off a part of the family operation just to satisfy a tax penalty from the federal government," said House Agriculture Committee Chairman Larry Combest.
The estate tax is commonly referred to as the "death tax," since it is generally triggered solely by death. It would also maintain stepped-up basis on up to $5.6 million of assets. If the bill were to become law, all family operations would retain stepped-up basis for $1.3 million of assets and heirs to larger family farms or ranches could choose which assets retain the step-up in basis.
Except for changes in the schedule, the tax repeal takes almost the exact approach to repealing the death tax that Congress included in last year's Taxpayer Refund and Relief Act of 1999 that was vetoed by President Clinton. If the president would sign death tax repeal into law, families could benefit by $28.3 billion in tax relief over five years.