Wisconsin Farm Bureau: Seeks estate tax changes

Contact: Casey Langan, Director of Public Relations, 608-828-5711

MADISON – The Wisconsin Farm Bureau is asking U.S. Senators Herb Kohl and Russ Feingold to support legislation that would make needed changes to the estate tax.

“The off again on again nature of estate tax law makes it difficult, if not impossible, for farmers to engage in planning for the transfer of a family business from one generation to the next,” Jeff Lyon, Farm Bureau’s Director of Governmental Relations wrote to Wisconsin’s two senators.

That’s especially been the case lately. Last year the estate tax rate was 45 percent, with a $3.5 million exemption. The tax expired in 2010, but is set to return in January 2011 with a top rate of 55 percent and a $1 million per person exemption.

The Farm Bureau is urging Sens. Kohl and Feingold to support a bill from Senators Blanche Lincoln (D-Arkansas) and John Kyl (R-Arizona) to provide a $5 million per person exemption and a 35 percent rate.

“The estate tax burden falls heavily on farm families because agriculture takes a lot of capital assets, such as land and equipment, to generate the same dollar in income that another type of business could generate with less,” Lyon explained. “Estate taxes can destroy family businesses when the tax forces surviving family members to sell land, buildings or equipment to generate enough money to pay the tax.”

With the higher rate and lower exemption that is set to take place in 2011, more farm families could find the estate tax to be an issue if a farm owner should die.

The Farm Bureau’s letter to the senators showed how. According to the Wisconsin Agricultural Statistic Service, Wisconsin’s average farm real estate value per acre (including buildings) was $3,850 per acre. Using this average, a farm of 500 acres would have a value of $1.925 million. The 2007 Census of Agriculture says there were 6,105 farms of 500 acres or larger.

“With a $1 million per person exemption, many small business owners, including a married couple with a 500 acre farm would find themselves subject to the estate tax when one of them dies,” Lyon said. “The Farm Bureau is asking all farm families to contact the senators and tell them that they need certainty on the estate tax to prepare for the future of their farms by eventually being able to afford to pass them on to the next generation.”