Congress Should Promptly Enact Permanent Solution
WASHINGTON, DC – If estate taxes are allowed to be reinstated at the beginning of 2011 with only a $1 million exemption and top rate of 55 percent, U.S. agriculture will be affected very negatively. The U.S. cotton industry will be particularly hard hit as family-owned cotton farms and associated small businesses, including gins, warehouses, processors and merchandizing firms, will be affected.
That was the message delivered here today during a news conference at the National Press Club by Taylor Slade, a Williamston, NC, cotton and peanut producer. Slade is a National Cotton Council delegate and a past North Carolina Cotton Producers Association president.
Slade, whose family’s operation has been in business since 1722, emphasized that farming is a land-based, capital intensive industry with few options for paying estate taxes when they come due. He also explained that not just farms but much of cotton’s infrastructure, which creates key employment in rural areas, also will be hard-hit.
“The 2011 change to the estate tax law does a disservice to U.S. agriculture – an industry that consistently provides a safe, abundant and affordable supply of food and fiber to this nation and the world,” Slade said. “The current state of the economy, coupled with the uncertain nature of estate tax liabilities, just makes it difficult for family-owned farms and ranches – which face the same economic challenges as other small businesses -- to make sound business decisions.”
As much as 80 percent of cotton production occurs on farms that would be affected by an estate tax with a $1 million exemption. In the Mississippi Delta and Southeastern regions, for example, average cropland values equate to just 333 to 500 acres necessary to reach $1 million in assets, and this simple approach overstates the number of acres because it does not account for the value of machinery/buildings.
Slade stated that while the National Cotton Council supports the complete elimination of estate taxes, the short term may require a compromise that would be less draconian than the reinstatement of the $1 million exemption. An acceptable intermediate outcome would include raising the exemption to no less than $5 million per person and reducing the top rate to no more than 35 percent. He said it also is imperative that the exemption be indexed to inflation, provide for spousal transfers and include the stepped-up basis.
The Cotton Council believes this formula “will provide permanent and meaningful estate tax relief – a reform that will strengthen the business climate for family farmers and ranchers while ensuring agricultural businesses are passed down to future generations,” Slade said.
Other organizations that participated in the news conference included: the American Farm Bureau Federation, the American Soybean Association, the National Association of Wheat Growers, the National Cattlemen’s Beef Association, the National Corn Growers Association, the National Farmers Union, the National Milk Producers Federation, the National Pork Producers Council, and the Public Lands Council.