Cattlemen are trying to get policy makers to understand the impact of the estate tax on ranchers and the communities in which they live and view the current focus on tax reform as an opportunity to get it repealed.
National Cattlemen’s Beef Association has launched a social-media blitz to build support for comprehensive tax reform that permanently repeals the estate tax.
NCBA is targeting members of Congress, hoping to educate them on how the tax code affects producers. That’s hard to understand if they don’t have an agricultural background, said Max Moncaster, NCBA associate director of policy communication.
“We want to make sure the message from our members is loud and clear and understood by them,” he said.
While the campaign is heavily focused on the so-called “death” tax, it also focuses on maintaining provisions in the tax code that make the tax burden fair to producers, said Danielle Beck, NCBA director of government affairs.
Those provisions include cash accounting, stepped-up basis, full expensing, interest deductions and like-kind exchanges. Cutting those critical provisions to accommodate lower tax rates would effectively be a tax increase for producers, she said.
The campaign shines a spotlight on the stories of real ranchers who have had to deal with the onerous death tax and also highlights the tax provisions that need to be maintained.
It centers around a new website — cattlemenfortaxreform.com — featuring videos and infographics being heavily promoted on Facebook, Twitter and other social-media platforms.
The estate tax is particularly harmful to agricultural producers, Moncaster said.
“Since all the assets are tied up in land, families hit by the estate tax are forced to sell their farm/ranch land in order to pay the bill. But without the land, you can’t have a farm or ranch or pass to on to the next generation,” he said.
Producers spend huge sums of money employing lawyers, accountants and other professionals trying to figure out how to structure their business in a way that allows them to pass it on. The system is highly complex, which makes it expensive to navigate, he said.
While Congress has given a little bit of relief from the estate tax by increasing exemption levels, which is appreciated, the need for full repeal is still needed, Beck said.
There are still a number of producers who are forced to allocate large amounts of money for estate planning. Some are spending from $20,000 to $50,000 a year, money that could otherwise be used to employ workers and support local communities, she said.
Farm and ranch operations make use of special farm provisions, alter their business practices, and engage in costly planning to effectively manage their tax burden in order to ensure they can pass the operation on to the next generation, she said.
In many instances, they will restructure their businesses in ways that impede growth, just to avoid a costly tax bill. These processes are expensive and complex, plus they reduce jobs and drain economic activity in rural communities, she said.
“Given all these costs of compliance, the phase-out and repeal of the federal estate tax will affect a much broader group of farmers than just those who owe (the estate) tax,” she said.