Smart, hard work combined with good planning increases the likelihood of a bright and prosperous future. This is considered the American way – the American dream.
Part of this same American dream is the expectation that future generations will experience a better life than that of their parents. It’s always been that way – parents want their children to have more opportunities than they did.
The fondest wish of Kansas farmers, ranchers and small business owners is to pass these family ventures on to their children and grandchildren. They work years to leave a legacy of land or a business.
Unfortunately, that shared dream is threatened by an estate tax that has hung above the heads of farmers and ranchers for far too long. If farmers cannot pass on their land from one generation to the next, it threatens the future of our farms and forces farmers and ranchers to find alternatives to keep the family business alive.
For the first time in more than 30 years, Congress is looking at major tax reform. The transfer of land used in farming and ranching must be part of this discussion. This remains a huge task and with the right provisions, and an updated federal tax code, it could yield economic growth across Kansas and rural America.
Land remains our paramount asset. Still it can also be the most difficult to come by as property values increase.
Younger farm and ranch generations remain burdened by the challenge of holding onto family property if they cannot pay the estate tax. If this occurs, they may not return to the family farm or ranch.
When Uncle Sam comes to pay his respects, surviving family members, without enough cash may be forced to sell land, buildings or equipment they need to keep their operations running, just to pay the tax bill.
Rural communities and businesses suffer when farms and ranches are dismantled and farmland is sold. When this occurs near urban centers farmland is often lost forever to development.
The money farmers pay to the government in capital gains taxes is money that could be reinvested in the farm or ranch and indirectly into the rural community where the farm is located. Local machinery, fuel, herbicide, fertilizer and parts dealers will suffer. Such businesses keep people employed and provide much-needed money to local governments in the form of county or city sales taxes.
Estate taxes can also threaten the transfer of farmland between farmers and ranchers. As farmers consider retirement, they set the selling price of land or other assets high enough to recover the cost of capital gains taxes. This increases the likelihood farmland may be developed for other uses because few young farmers can afford to buy from these retiring producers.
Contact your lawmakers as tax reform legislation comes up for a vote. Estate tax relief will give future generations hope they can maintain the family legacy and keep the farm. Most importantly, estate tax relief will keep alive the American dream – if you work hard and plan ahead, you can pass the fruits of your labor to your children and grandchildren.