Farmers say inheritance tax could force generations off land
Posted December 28, 2012 5:45 p.m. EST
Updated December 28, 2012 6:42 p.m. EST
Jeff Allen is with Beth Moore Produce of Johnston County, where farming has been the family business for more than 40 years.
The plan is to keep it that way.
“One of the sons will take over and, hopefully, it will continue to go on just like it has for generations,” Allen said.
But he and many other farmers are worried that a change to the inheritance tax could bring that legacy to an abrupt end if the federal government doesn’t reach a resolution on the so-called “fiscal cliff.”
Currently, when a farm owner dies, the heir doesn’t owe taxes if the estate is valued at less than $5 million. Any amount beyond that is subject to a 35 percent tax rate.
But if Congress doesn't extend that tax cut by Jan. 1, the exemption next year would shrink to $1 million, and the tax rate would go up to 55 percent.
“It has the potential for taking many people who think they're going to farm, who are farming today – younger people – to wipe that generation of farmers off the farm,” said Larry Wooten, president of the North Carolina Farm Bureau.
The inheritance tax does bring in a bit of revenue for North Carolina. According to the state Department of Revenue, the tax put almost $24 million into the General Fund last year.
Mike Strowd, co-owner of Maple View Farm in Hillsborough, said the issue is a pressing one for North Carolina farmers, especially those who want their children to carry on the family business.
“There's no way in the world they can actually pay the inheritance tax and keep on trying to do what the parents did, whether it's planting corn, milking cows or growing soybeans,” he said.
To grow those crops, millions of dollars in equipment, land and labor is needed, Strowd said.
So, the farmers wait – along with the rest of the nation – to see what will happen as the Jan. 1 deadline for lawmakers nears.
“It would be a big hit,” Allen said.