Kratovil: Estate Tax Relief That Does Not Protect Family Farms Is Not Good Enough

Opposes legislation that fails to both protect family farms and index for inflation protecting future generations of tax payers.

Washington, DC – Rep. Frank Kratovil opposed HR 4154, a proposal to permanently extend 2009 estate tax levels, citing the legislation’s failure to extend adequate protections to family-owned farms. Kratovil also noted that the $3.5 million threshold included in the bill, aimed at exempting smaller estates from the tax, is not indexed for inflation and would therefore put future generations of middle class tax payers at risk from a tax that was never intended for them.

Rep. Kratovil pointed to the challenges faced by family farms in opposing this legislation. “Farms are not a liquid asset. The value of a farm is in the land. Without an estate tax exemption for family farms, families will often be forced to sell off part of their land to pay this tax,” said Kratovil.

Kratovil is a co-sponsor of H.R. 3524, the Family Farm Preservation and Conservation Estate Tax Act. This bill will exempt farms and ranches from Federal estate taxes after death of the owner for as long as the property stays in the family and it continues to operate as a farm. The legislation also exempts landowners who have placed their land in a conservation easement from paying the estate tax as long as it persists in that capacity. “Farming is a major part of our heritage and our economy here in Maryland, but without an estate tax exemption for family farms, I fear that ag preservation will give way to over-development,” said Kratovil.

Additionally, Rep. Kratovil cited the bill’s failure to index the exemption for inflation as a flaw in the proposal. He pointed to a similar problem with the Alternative Minimum Tax, which now threatens middle class families that were never intended to be captured by the tax at the time of its passage several decades ago.

“A permanent fix to the estate tax is needed, but I would prefer we pass a bill that preserves family farms and protects middle class taxpayers both now and in the future,” said Kratovil. “I will continue to work for better estate tax reform legislation.”