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Guest Opinion

Death Tax bandage

The Aberdeen Times of Aberdeen, Idaho

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Families should not be forced tsell their farms or small businesses tpay the federal Death Tax when they lose a loved one. Selling off productive farmland and businesses tmeet unfair, overly-burdensome tax liabilities reduces jobs and destroys families' financial futures. While the Death Tax must be permanently and fully eliminated, I supported the recent proposal tprevent the tax from springing back tprevious burdensome levels for the next twyears. In the meantime, Congress must work tpermanently eliminate this unreasonable tax.

The Death Tax is a double tax on income already taxed when it was first earned by the decedent, and it is especially burdensome for family farmers and small businesses in rural states, like Idaho. In many areas, farm and ranch land values have increased substantially, making it difficult for families tmeet the high Death Tax burden while passing their legacy ontthe next generation of family farmers and keeping the land in production. In 2009, Idahfamilies paid more than $ 118 million in federal estate taxes, which is more than was paid by families in many neighboring and rural states, such as Montana, Iowa, Nebraska, Wyoming and Arkansas. However, estimates don't encompass the full extent of the burden the Death Tax places on Idahfamily farmers and businesses, as many of them gthrough costly, time-consuming estate planning efforts tensure that these family farms and businesses can be passed down tfuture generations, rather than having tbe sold off in order tpay the tax burden tthe government.

Of all the provisions in the bipartisan tax relief enacted in 2001, the Death Tax is one of the most confusing and frequently-changing provisions. Prior t2001, the Death Tax was set at a maximum rate of 55 percent, with a $1 million exemption. Under the 2001 legislation, the rate was gradually phased down and the exemption phased up. By 2009, the rate was down t45 percent, and the exemption was $3.5 million. Under the original legislation, for 2010 only, the rate was zero, before being scheduled treturn tthe pre-2001 rate and exemption level for 2011 and beyond. This quirk in the law led tunintended incentives requiring Congressional action.

Recognizing that the votes were not there in Congress tpass a full repeal of the Death Tax, I supported a proposal tensure that the tax did not spring back ta 55 percent rate this year. This bipartisan. legislation, which is supported by many farm and small busi-. ness groups in Idahand across; the country, provides for a 35 percent maximum rate and a $5 million exemption, along with a step up in basis for 2011 and' 2012.

Unfortunately, this is only a temporary fix, and merely kicks the can down the road. In twyears, Congress will again face the decision of what tdabout all of the tax relief enacted in 2001.1 hope by that time Congress will be responsible enough tenact comprehensive tax reform that will simplify the tax code, broaden the base, lower the rates and make our tax code more competitive for American farms and small businesses competing in the global marketplace.

High federal taxes should not prevent a family farmer, rancher or other business owner from passing the business they developed on ttheir; children and grandchildren. Penalizing productive heritage undercuts efforts tmaintain 1 small businesses and local jobs. We must utilize the next twyears teliminate the Death Tax and advance some tax certainty and fairness for -1 the betterment of families, communities and the U.S. economy.



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Original Publication Date: January 19, 2011



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