Senator John Thune (R-S.D.) says the American Farm Bureau Federation (AFBF) report released today clearly shows that the Democrat-controlled Senate’s recently passed tax legislation would jeopardize the future of 71 percent of South Dakota’s family farms because it intentionally returns the death tax exemption to $1 million next year instead of keeping it at the current $5 million.
Over the past few years the prices of all South Dakota agricultural land, especially cropland, has increased substantially. This dramatic price increase, along with the Democrats’ proposal to reduce the death tax exemption level to $1 million, could make passing a family farm of only a few hundred acres to the next generation economically impossible due to death tax liability. According to data collected by AFBF, when applying 2012 farm real estate values, farms and ranches larger than 714 acres would likely exceed the $1 million exemption level. Crop producers would be particularly impacted by the lower exemption levels, as farms larger than 431 acres of cropland would be likely to exceed the $1 million exemption level.
“This report outlines just how devastating the Senate Democrats’ death tax proposal would be to South Dakota farmers and ranchers,” said Thune. “The value of cropland across South Dakota has increased by more than 23 percent over the last year. According to the data collected by AFBF from the U.S. Department of Agriculture’s National Agriculture Statistics Service, the appreciated value of cropland throughout the state means that nearly 71 percent of South Dakota farms would exceed the $1 million exemption level under the Senate Democrats’ proposal. Since many family farm and ranch assets consist of land, livestock, equipment, and small cash reserves, this punitive tax leaves the next generation with little choice but to sell family holdings to pay the death tax. In March of this year, I introduced the Death Tax Repeal Permanency Act which would permanently repeal the federal death tax and the generation skipping transfer tax. Repeal of this destructive tax is critical to keeping family farms and ranches intact across South Dakota.”
“Today’s report shows that the outdated death tax would impact over half of South Dakota’s farms and ranches if it is allowed to revert to pre-2001 levels,” said Scott VanderWal, President of the South Dakota Farm Bureau. “The Senate should pass Senator Thune’s death tax repeal bill, or at the very least, extend current levels to protect South Dakota’s agriculture producers from this unfair tax.”On July 25, 2012, Senate Democrats passed legislation on a party-line vote of 51 to 48 that would increase taxes on small businesses and families. Additionally, if enacted, this bill would return the current $5 million death tax exemption to $1 million next year, and would raise the tax rate from the current top rate of 35 percent to an exorbitant 55 percent. Senator Thune’s legislation, the Death Tax Repeal Permanency Act, has 37 cosponsors and is supported by more than 50 groups and organizations. Representative Kevin Brady (R-Texas) introduced identical legislation in the House of Representatives and the bill has more than 200 bipartisan cosponsors.