Death knell tolls for death tax repeal

By Charles Kruse

The U.S. House of Representatives passed excellent legislation in April of 2005 in favor of making repeal of the Death Tax permanent, and sent the measure to the Senate where it was met with a filibuster. Senate Majority Leader Bill Frist filed cloture a couple of weeks ago in an attempt to stop the filibuster which continues to prevent debate and vote on permanent repeal of the Death Tax in the U.S. Senate.

Frist vowed to bring Death Tax legislation to a vote, but in the end the Senate was unable to muster the 60 votes needed to invoke cloture. Even some Senators who support repeal of the Death Tax, or at least are willing to debate the issue, voted against invoking cloture — filibuster votes seldom cross party lines. Both Missouri senators, Bond and Talent, strongly support repealing the estate tax.

The strange truth is the Death Tax, formally known as Estate Taxes, will indeed expire in a few years. The tax cuts passed in President Bush’s first term included a gradual phasing out of the Death Tax until it is completely done away with in December of 2010, so what’s the problem? Simple — the tax cuts were not permanent.

While the Death Tax expires totally in December, 2010, it returns in January, 2011, back at the level prior to any tax cuts at all – up to 57% of people’s assets may be taken when they die. The Senate’s inability to obtain 60 votes to stop the filibuster was a huge disappointment.

Farm Bureau has worked long and hard to eliminate what is one of the most onerous of all taxes, the taxation upon the death of a person where the federal government steps in and takes over half of the assets this person has. I wish somebody would explain to me how they think that is fair.

The Death Tax is patently wrong to begin with, but to reduce the tax a little at a time each year until it is totally gone at the end of 2010, and then reinstate the tax at its original level of taxation at the beginning of 2011 is just cruel.

Imagine being terminally ill and leaving your farm to your children who want to continue the family farming operation, but dying on Jan. 1, 2011. Pass the day before, and your estate goes to your family; pass the next day, and up to 57% of it goes to the government.

Running a successful family farming operation requires a lot of investment in land and equipment. If the Death Tax takes more than half the estate, there is little chance the remainder of the family farming operation can compete and succeed. And, tax planning to minimize the remittance requires money that is better spent on enhancing the farm or ranch.

The Senate still has the opportunity to debate and vote on the House-passed legislation if the filibuster can be stopped prior to the end of this session of Congress, but with the recent failure to invoke cloture, the death knell is beginning to toll for Death Tax repeal.

(Charles Kruse, a fourth generation family farmer from Dexter, Mo., serves as president for the Missouri Farm Bureau, the state’s largest farm organization.)