Farmers hope for exemption from federal estate taxes
| Friday, Sep 11 2009 04:23 PM
Last Updated Friday, Sep 11 2009 04:25 PM
Family farms will be exempt from federal estate taxes as long as the farm stays in the family if a bill recently introduced in the U.S. House of Representatives passes.
H.R. 3524, the Family Farm Preservation and Conservation Estate Tax Act, was assigned to the House Ways and Means Committee after its introduction by Rep. Mike Thompson, D-Napa, and Rep. John Salazar, D-Colo.
Thompson couldn't be reached for comment, but the congressman's spokeswoman, Laurel Brown, said the bill would "indefinitely defer estate taxes on agricultural and conserved land so long as it remains in the family, ensuring that nobody will have to sell their land just to pay estate taxes."
Murray Family Farms in Bakersfield grows strawberries, blueberries, blackberries, peaches, plums and nectarines, among other produce.
Co-owner Vickie Murray called the estate tax proposal "wonderful" because she and her husband have three children who want to keep growing produce and selling it at the company's indoor farmer's market.
"Anything that would make it easier for them to continue, it just brings tears to my eyes," Murray said. "It encourages farms to stay in the family, and so many family farms are struggling right now. There aren't that many left."
Agriculture has undergone unprecedented consolidation in recent years.
There were 144,000 farms producing 75 percent of the value of U.S. agricultural production in 2002, according the the USDA's Census of Agriculture.
By 2007 -- the most recent year for which data are available -- the number had declined to 125,000.
"There are some family-owned farms that are large corporations, but most of them are small and can't achieve the economies of scale to sell at competitive prices," said Shermain Hardesty, an agricultural economist and director of University of California's Small Farm Program.
"The smaller ones, and by that I mean farms with $500,000 in annual revenue or less, are under incredible pressure and having to look at alternative venues like farmer's markets and things to stay alive," Hardesty said.
The law that now governs agricultural estate taxes is set to expire next year. It is expected to be replaced in 2011 by another law that would tax families at a blend of 2001 and 2002 levels.
But even that level is hard for many family farms, which typically are asset rich but cash poor.
A coalition of 28 farm organizations has endorsed the new estate tax legislation, including California Farm Bureau Federation, the California Association of Winegrape Growers, Western Growers and Western United Dairymen.
"This is a big deal for us," said Jack King, manager of national affairs for the California Farm Bureau Federation. "You can't be in front of an audience of farmers talking about this issue without someone saying this has happened to them, sometimes over two or three generations."
