Nebraska Farm Bureau officials worry that if negotiations fail to resolve the “fiscal cliff” issue in Washington, the fallout would have a major impact on farms in Nebraska.
Some economists predict that if Congress fails to head off the expiration of the Bush-era tax cuts or the enactment of deep, automatic budget cuts the economy will fall off a “fiscal cliff”.
Among the tax cuts affected would be the Estate Tax. At present, the Estate Tax rate is 35% after the inheritance exceeds the $1 million exemption threshold. Previously, the tax rate was 55% with a $5.1 million exemption.
If negotiations in Washington break down, the Estate Tax jumps dramatically, making it more costly for farms to be passed down from one generation to the next.
“Farming and ranching is a difficult proposition to begin with and let alone having that high tax bill if you were to inherit a piece of property,” according to Jordan Dux, Director of National Affairs for the Nebraska Farm Bureau.
Dux says that with land prices ranging from an average of $2,200 an acre for dry ground and up to 8-Thousand dollars an acre for irrigated ground, it wouldn’t take a large operation to hit the one million dollar threshold and trigger the 55-percent tax. That, according to Dux, would force heirs to either give up hopes to keep farming their parent’s ground or sell off portions to pay the tax.
AUDIO: Brent Martin reports [:45]