THUNE: ‘Death tax’ threatens farms, businessesSouth Dakota businesses that classify their operations as “family owned and operated” take pride in that description. Family farmers, ranchers, and businesses are proud to pass on their legacies from one generation to the next knowing their lifetime of hard work has paid off and their good family name will continue.
By: U.S. Sen. John Thune , R-S.D.
South Dakota businesses that classify their operations as “family owned and operated” take pride in that description. Family farmers, ranchers, and businesses are proud to pass on their legacies from one generation to the next knowing their lifetime of hard work has paid off and their good family name will continue. It is important to them that future generations have the opportunity to care for their land and contribute to the communities they hold dear. It often takes generations to build a flourishing family business, and for some businesses only one bad Washington policy to destroy it.
Unfortunately one proposal coming out of the Democratled Senate could be just that devastating to a very large number of South Dakota’s family farms, ranches, and small businesses. Recently, Senate Democrats passed legislation on a party-line vote of 51 to 48 that would increase taxes on small businesses and middle class 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. Not only would this tax devastate family farms and businesses, but it would also hit them at the worst time, when they are mourning the loss of a loved one. The tax would force grieving families to make difficult decisions about how to pay a tax on a loved one’s life savings, business, or real estate, acquired with income already taxed when it was initially earned.
This proposed tax would take an especially hard toll on South Dakota’s ranchers and farmers because the value of their agricultural land has steadily increased over the past several years. Based on the most recent U.S. Department of Agriculture (USDA) data, about one-half of South Dakota’s farmers and ranchers would be negatively impacted by the death tax proposal recently passed by the Senate. Since many family farms are land rich but cash poor, this punitive tax leaves the next generation with little choice but to sell family holdings to pay the death tax. According to USDA, between 2000 and 2011, the value of farm real estate in South Dakota has appreciated $720 per acre, or 189 percent.
This means the value of the average farm in South Dakota can be well above the $1 million exemption amount that was included in the Senatepassed tax bill and would make them subject to the devastating death tax.
I believe that repeal of the destructive death tax is critical to keeping family farms and businesses intact across South Dakota. Earlier this year, I introduced the Death Tax Repeal Permanency Act which would permanently repeal the federal death tax and the generation-skipping transfer tax.
I am committed to promoting policies that provide incentives to grow family business and support building our economy, which starts with a permanent end to this unfair tax.
John Thune, a Republican who grew up in Murdo, represents South Dakota in the United States Senate.