A House Committee on Ways and Means subcommittee on Wednesday held a hearing to discuss the impacts of estate taxes on family businesses and farms, hearing from farmers Bobby McKnight and Brandon Whitt, members of the National Cattlemen's Beef Association and American Farm Bureau, respectively.
McKnight, a seventh-generation cattleman from Fort Davis, Texas, testified before the subcommittee on how the death tax affects cattle producers.
"Many farm and ranch families are asset-rich and cash-poor, with most of the value of their estate attributed to the value of the land they use to raise cattle and grow food and fiber for consumers around the world," McKnight said.
"Strong export demand has been one of the driving forces in the increase in value of crop and pasture land in almost every state, not to mention the pressure from commercial development," he said. "Together, the increase in the value of farmland has many farm and ranch families concerned that they may trigger the estate tax simply through increasing land values."
McKnight said when things have been lean due to estate tax expenses, he's had to cut his staff. "The skilled labor that I needed to run my operation was lost," he said.
Farm Bureau member and Tennessee farmer Brandon Whitt also explained the impacts of estate taxes, or "death taxes," on family-owned businesses and farms and ranches.
"Agriculture looks different on farms from state to state but we all face the same reality that an uncertain tomorrow can bring," Whitt said.
While facing unpredictable weather and fluctuating markets, farmers and ranchers make decisions to expand their businesses and remain competitive, AFBF said. "Why should uncertainties over estate taxes be added to these others? Our job is hard enough as it is," he said.
In Whitt's own experience, land he helps farm with his wife and father-in-law was sold to pay estate taxes. The land was then lost to development.
Related: With transition plans, cash is king
The family still faces long-term decisions to make the farm viable far into the future, Whitt explained.
"We believe that our farm adds value to our town, that our neighbors value our open space, that our customers value having a local food source and that our farm market creates a sense of community," Whitt said.
According to the American Farm Bureau, around 90% of farm and ranch assets are illiquid, with the value tied up in land, buildings and equipment.