Talk to most people about the impacts of the Death Tax, and images of jet-setting billionaires and wealthy business moguls will likely come to mind. But in its present form, the Death Tax (also known as the federal estate tax) preys on a forgotten victim: family-owned ranches.
A Death Tax is a tax imposed on assets left to heirs. Today it represents one of the primary obstacles for keeping family-owned ranches and farms intact and viable. To understand why, consider that ranchers – like many agricultural producers – rely on a land-rich, cash-poor business model. According to the U.S. Department of Agriculture (USDA), 91 percent of all farm and ranch assets are illiquid, meaning they cannot be easily converted to cash. When family ranchers are hit with the Death Tax, they are often forced to sell off land, farm equipment, parts of the operation or even the entire ranch to pay off their tax bill. In addition to hampering economic growth in rural communities, the Death Tax puts the dream of passing on a family-owned ranching operation out of reach.
The Bottom Line
U.S. livestock producers understand and appreciate the role of taxes in maintaining and improving our nation; however, they also believe that the most effective tax code is a fair one. For this reason, NCBA ardently supports full and permanent repeal of the Death Tax.
Why it Matters
- The Death Tax undermines the ability of ranchers to pass on family-owned operations to their children and grandchildren, hurting rural communities that depend on agriculture
- Managing grave tax liabilities diverts precious time and resources away from critical business decisions, such as expanding herd size or hiring new employees
- Eliminating the Death Tax would make succession planning significantly less complex and be a boon to local rural economies supported by agriculture
