Family-run farms, ranches, and small businesses are the backbone of communities across Nebraska. They fuel our economy, feed our citizens, and provide meaningful opportunity to build generational wealth. Our federal tax code, however, currently punishes these efforts and makes it more difficult for families to pass their operations to the next generation. This needs to change, and I am proud to support efforts in Congress to do just that.
The federal death tax, also known as the estate tax, is an unfair burden on family-owned farms, ranches, and small businesses. For decades, these enterprises are built from the ground up, with countless hours of sacrifice and grit. When the time comes to transfer these enterprises to the next generation, the death tax forces families to make heart-wrenching decisions.
Ninety-five percent of farms in Nebraska are family-owned, according to a 2017 USDA Census of Agriculture. Imagine a family that has cultivated a farm for decades, tilling the soil and working the land to grow food to feed our country. Suddenly, the mom or dad passes away, and the family is hit with an astronomical tax bill of 40% based on the value of their assets. Given the capital-intensive nature of production agriculture, those assets – like land, livestock, and equipment – are not liquid. That leaves these families often facing the unimaginable choice of selling a significant portion of their operations just to pay the death tax. This not only jeopardizes the family’s ability to continue their farm, but also risks harming the communities that rely on them.
Family-run businesses can find themselves in similar situations when the overwhelming majority of a business’ assets are invested directly into the business, not their bank account. In order to pay the death tax, the children would have to sell part or all of the business their parents spent decades building. When these small businesses are forced to close or downsize, the impact goes beyond the families running them. Small businesses have created 2 out of every 3 new jobs in America over the past 25 years.
Recently, I joined 40 of my U.S. Senate colleagues to re-introduce a bill led by Senator John Thune (R-SD) to permanently repeal the federal death tax. This common-sense legislation would eliminate the estate and generation-skipping transfer taxes that harm multi-generational farms, ranches, and businesses in the wake of the owner’s death. While the 2017 Tax Cuts and Jobs Act increased the amount of assets excluded from the death tax, this provision will expire in 2025 without action from Congress. The bill we introduced would eliminate the threshold and provide a permanent repeal of the tax, giving families the certainty they need as they do estate planning. That’s why this bill is supported by agriculture and business leaders alike, including the NFIB, the American Farm Bureau Federation, the National Cattlemen’s Beef Association, the National Association of Manufacturers, and many others.
No family business should have to be sold off to pay taxes. The death tax is an unfair and unnecessary tax that can devastate family-owned farms, ranches, and small businesses. The tax penalizes grit and success, and undermines the lifelong efforts of Nebraskans to leave a legacy for their kids and grandkids. It’s time for the death tax to die. By repealing the federal death tax, we can create a fairer tax system that protects family-run businesses and encourages investment, entrepreneurship, and economic growth.
Along with Senator Fischer and the rest of my colleagues in the Nebraska delegation, my team and I are here to serve you. Contact my team and I anytime by phone at 202-224-4224 or on my website at www.ricketts.senate.gov/contact. I am honored to serve our great state and will continue to work to protect the Good Life from Washington overreach.