(WCIA) — Legislation moving through Congress is making agriculture very nervous about its negative impact on family farms.
Some members of Congress are leveling their sights on family farms in an effort to pay for recent economic relief and future infrastructure programs. There are two separate tax issues, and both could have an unrecoverable impact on a farm family and their farming operation as a whole.
The proposed legislation would lower the federal estate tax exemption level from $11.7 million to $3.5 million per individual, resulting in a larger number of farm families owing estate tax.
If the estate tax exemption were reduced to $3.5 million, it would require slightly more than 1,100 acres of central Illinois farmland to reach the exemption level. More than 243,000 farms, or 12% of operations nationally, would be impacted. These farms operate a total of 667 million acres, suggesting that a $3.5 million estate tax exemption could impact as much as 74% of the farmland in the United States.
To pay the taxes on inherited farmland, farming families are forced to liquidate their property, reducing the size of the farm needed to support a growing number of would-be young farmers.
The second tax change concerning agriculture removes the automatic step-up in land value provisions at the time of death creating the potential for more tax.
American Farm Bureau economists say the taxes would be anywhere from $500-800 per acre across the Corn Belt, and over $1,000 per acre in portions of Iowa and Illinois.
While farm lobbyists are working hard against the measures, University of Illinois ag economists are advising farm families to seek help from tax advisors about their farm succession plans.