WASHINGTON, DC – U.S. Senator Pat Roberts today spoke on the Senate floor against efforts to allow estate tax relief to expire because it would further harm farmers and ranchers at a time when they are already suffering from record drought.

“All across farm country, we are suffering a severe drought – a real emergency, particularly for the livestock industry,” Roberts said.

“Now we have the proposed changes to the current estate tax – the infamous death tax – all based again on a select few in Washington deciding who is wealthy – what’s a fair share – playing again with the politics of envy – of class warfare.

“Proposed changes to the code will mean that more than 20 times the current number of farming estates would be hit with this massive death tax hike - a 2,000 percent increase. All of this on top of the dire economic consequences to all of rural America suffering from a severe drought, talk about adding insult to injury.”

Senator Roberts is ranking member of the Senate Committee on Agriculture, Nutrition and Forestry, and is a senior member of the Senate Committee on Finance which has jurisdiction of tax issues.

Video of his speech can be found here. Or by clicking "play" on the video below:

The following is text of Senator Roberts’ prepared remarks:

“I rise today to share my concerns over the extension, or lack thereof, of the estate and gift tax provisions of the current tax code.

“Like much of the tax code, the estate and gift tax provisions are complex, costly to comply with, and have very serious negative consequences. And these negative consequences disproportionately harm farmers and ranchers.

“Visit with farmers and ranchers today – you had better stand back! They are upset, frustrated, angry, and they are worried.

“All across farm country, we are suffering and severe drought – a real emergency, particularly for the livestock industry.

“At the same time, they are facing a farm bill that’s in limbo – try planning in that environment.

“We also have an upside-down energy policy. All this builds a great deal of uncertainty.

“But, just to split the shingle, now we have the proposed changes to the current estate tax – the infamous death tax – all based again on a select few in Washington deciding who is wealthy – what’s a fair share – playing again with the politics of envy – of class warfare.

“Under current law, the federal estate tax is set at 35% on estates over $5 million. If nothing is changed on January 1, 2013 the estate tax exemption will drop from $5 million to $1 million and the estate tax rate will jump from 35% to 55%.

“Mr. President, if we do not act to extend the current death tax structure, the Joint Committee on Taxation reports that over 10 years, the number of small businesses subject to the death tax would increase from 1,800 to 23,700 and the number of farming estates subject to the death tax would increase from 900 to 25,200.

“That’s more than 20 times additional farming estates that would be hit with this massive death tax hike - a 2,000 percent increase.

“And it’s not just farms and ranches that would be affected.

“9 times more small businesses would be hit with this massive death tax hike - a 900 percent increase.

“12 times more taxable estates would be hit with this massive death tax hike - a 1,200 percent increase.

“While I support permanently repealing the death tax, if we cannot achieve that goal, how we structure this tax in particular has immediate, real world implications for folks in Kansas and across the country.

“The looming 2013 change to the estate tax law would be a huge disservice to agriculture because it is a land-based, capital-intensive industry with few options for paying estate taxes when they come due.

“The current state of our economy, coupled with the uncertain nature of estate tax liabilities, makes it difficult for family-owned farms and ranches to make any sound business decisions.

“They are on the sidelines of our economy – not on the economic playing field. There is no certainty.

“Raising the estate tax burden will strike a blow to farm and ranch operations trying to transition from one generation to the next.

“A $1 million exemption is not high enough to protect a typical farm or ranch able to support a family and, when coupled with a top rate of 55 percent, can be especially difficult if not impossible for farm and ranch businesses.

“Yet, our nation’s estate tax policy is in direct conflict with the desire to preserve and protect our nation’s family-owned farms and ranches.

“Individuals, family partnerships and family corporations own 98 percent of our nation’s 2 million farms and ranches.

“When estate taxes on an agricultural business exceed cash and other liquid assets, many surviving family partners will be forced to sell land, buildings or equipment needed to keep their businesses operating.

“With 85 percent of farm and ranch assets illiquid, producers have few options when it comes to generating cash to pay the estate tax.

“Recent increases in agriculture land values, on average 25 percent from 2010 to 2011, have greatly expanded the number of farms and ranches that now top the estate tax exemption.

“How on earth can farmers, ranchers, and small businesses even plan for this?

“In order to keep farm or ranch businesses operating after the death of the owner, families must plan for the estate tax.

“But under the Democrat bill we will vote on shortly, many more farmers and ranchers will face increased filing, paperwork, and other hassles in planning for succession.

“In fact, if we don’t extend the current estate tax, estates required to file paperwork with the IRS rise from 8600 to 107,500. That’s a lot of time and costs that could be saved.

“The planning costs associated with this tax are not only a drain on business resources, but also take money away from the day-to-day operations and investing in the business.

“Even with planning, uncertain tax law combined with changing land values and family situations make it impossible to guarantee that an estate plan will protect a family farm or ranch from estate taxes.

“This not only can cripple a farm or ranch operation, but it also hurts the rural communities and businesses that agriculture supports.

“The death tax is one of the worst offenders in bringing complexity to the tax code – it is one of the most distortive provisions in our system.

“Now, my colleagues on the other side of the aisle will point out that the estate tax is an instrument of social justice – that it is designed to limit wealth accumulation and to spread that wealth around.

“Even if you hold that socialistic view, the estate tax, which distorts no end of economic decisions, isn’t the most efficient method to re-distribute wealth.

“Clearly, taxpayers facing the death tax respond to the tax, cutting back on investments, and consuming more of the capital and other assets that could be passed on to build businesses.

“The disincentives the death tax creates, in the end, leads to lower growth, fewer jobs, less savings. How do you re-distribute that?

“In a troubled economy, this forced outcome does not make sense!

“Being able to plan for the future is critical. The current uncertainty leads to the repeated revision of wills and trusts, which burdens taxpayers and advisors alike.

“This is a big concern for folks in my state. Over and over again, I have been asked what Congress will do with these provisions, what should a rancher do, and how can they pass farms onto their children? I have even been asked, for planning purposes, if this is a good year to die? That’s astounding if not outrageous!

“It may be a good year because this egregious change is going nowhere, given that the legislation we will vote on in a little while is subject to a point of order, not having originated in the House – talk about a real nothing burger!

“I simply do not want folks in Kansas to have to make such important decisions on a tax law that’s changing all the time. We need to repeal or permanently set the death tax.

“If this tax cannot be repealed, it needs to be set in stone, maybe a gravestone! And at a rate and in a manner that provides certainty.

“While it’s important to permanently eliminate this punitive tax, until this can be accomplished, Congress must extend the current $5 million exemption, indexing it to reflect land values, continuing the spousal transfer and maintaining the top 35 percent tax rate.

“Finally, we pay taxes all our lives, so it just doesn’t make sense to be taxed again when we die.”

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