Blog for Rural America

The Center for Rural Affairs, a private, non-profit organization, is working to strengthen small businesses, family farms and ranches, and rural communities. Permission to reprint items from this web log is hereby granted, on the condition that clear credit is given to the original source of the material. If the blog provides information for a story, please let us know by sending an email to

Tuesday, August 23, 2005

Estate Tax Not a Burden to Farmers

New Study Shows Estate Tax Not a Burden to American Farmers

Only a very few farms would face the estate tax, according to a study of IRS data performed by the Congressional Budget Office.

A new report by the Congressional Budget office (CBO) dispels the notion that the estate tax is a burden to the nation’s farms, forcing them to sell their farms to pay the tax. In fact, exceedingly few farms will face the tax under the new exemption levels established by law in 2001.

The study, “Effects of the Federal Estate Tax on Farms and Small Businesses” was published in July. Analysts used tax returns from 1999 and 2000 to examine the effects of freezing the exemption level at $1.5 million, $2.0 million, or $3.5 million.

They found that under the $1.5 million exemption level – the current level – only 300 farm estates nationwide would have owed any estate tax in 2000. At the $2 million exemption level scheduled to take effect in 2006, only 123 farm estates would have owed estate taxes. The number dropped to 65 taxable farm estates in 2000 under the 2009 exemption level of $3.5 million.

Not only were few farms effected by the estate tax, those that were generally had enough liquid assets in 2000 to pay the tax without selling the farm. At a $2 million exemption, only 15 farm estates would have owed more in taxes than they could cover through their liquid assets. At a $3.5 million exemption, 13 farms would have faced that situation.

CBO cautions that it may have overstated the number of farm estates with liquidity constraints because certain assets held in trusts, like life insurance, were not used to calculate available assets. Estates with liquidity problems would also have had other options for paying the estate tax, such as spreading their payments out over 14 years. These would have allowed them to pay the tax without having to sell off farm assets.

For the purposes of their study, the CBO analysts defined a farm estate as one where the primary occupation of the decedent was farmer or farm worker. You can view the study on the Congressional Budget Office website,

With Congressional representatives back in Washington and faced with difficult budget cuts, these findings only strengthen the arguments in favor of keeping the estate tax. It brings in needed revenue that could help support programs that create opportunities for farmers, ranchers, small business owners, and rural communities. And that’s not money from those who can ill afford to pay it.

For more information contact: Chuck Hassebrook, Executive Director, Center for Rural Affairs, - or - John Crabtree, Center for Rural Affairs,

Center for Rural Affairs
Values. Worth. Action.


  • At 11:31 PM, Anonymous Anonymous said…

    I think this is a very good article and an important one for farmers to read. There are alot of crooked estate lawyers and insurance agents out there that feed off farmers being frightened that their farms are going to go to the IRS rather than their families. Keep up the great work and the great articles!

  • At 3:05 PM, Anonymous Anonymous said…

    especially insurance agents who do estate planning - feeding off the fears of famers is right. I know that not all of them are that way, but the ones that are do a lot of damage.

  • At 7:57 PM, Anonymous Anonymous said…

    I have yet to meet a person or family who has been burdened by the estate tax. It is damn silly that the Farm Bureau keeps beating this dead horse. On the list of Top 100 issues impacting family farms, the estate tax doesn't even register.


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