Friday, November 23, 2012

Estate tax increase - effect on farmland

Federal estate tax rates are set to increase drastically at the beginning of 2013, unless the federal government acts before the first of the new year.  The effect of this increase will be to force certain large farms to be sold upon the death of their current owners.  Fox News explains further with some examples of the impact of this increase in estate taxes:

Two decades ago, Kester paid the IRS $2 million when he inherited a 22,000-acre cattle ranch from his grandfather. Come January, the tax burden on his children will be more than $13 million.

For supporters of a high estate tax, which is imposed on somebody's estate after death, Kester is the kind of person they rarely mention. He doesn't own a mansion. He's not the CEO of a multi-national. But because of his line of work, he owns a lot of property that would be subject to a lot of tax.
The consequences will be varied and long lasting.  More real estate will be slated for proposed subdivisions. More residential lots will be available for sale, resulting in downward pressure on real estate prices.  Farmland will be less plentiful, resulting in upward pressure on food prices. 

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