Thompson floats bill to keep estate taxes from hurting families

July 01--A bill to protect families who want to pass their farm or business on to the next generation was introduced by Rep. Mike Thompson (D-St. Helena), his office announced.

The Family Business Preservation Estate Tax Act would create a deduction, allowing families to pass their business to their descendants, without losing the farm, so-to-speak, in estate taxes, as long as it remains in the family.

"Building a legacy for your children and grandchildren is a key part of the American Dream, and families deserve to know they won't lose what they've built -- especially after losing a loved one," Thompson said in a statement. "Many family farms are rich in land but cash poor. A major tax on their estate could force them to sell off the very assets they worked so hard to build. That isn't right."

While some have proposed simply wiping out the estate tax altogether, Thompson said this specific issue needs to be addressed "without creating a new fiscal hole by fully repealing the tax."

"There's a better way," he said. "We can protect farms and family businesses. We can be fiscally responsible and compassionate to families who want to preserve their legacy. We don't have to throw the baby out with the bath water by repealing the entire estate tax. We can address specific concerns, solve problems, and protect family legacies."

Currently, the estate tax applies on estates valued at in excess of $5.49 million for an individual and $10.98 million for a married couple. Thompson's proposal would create a deduction of up to $5.49 million -- indexed for inflation -- for family-owned businesses, and family-owned farms would also have the option to deduct the entire value of their farmland. Families could benefit from the deduction as long as they continue to operate the business for at least 10 years.

Thompson, who represents all or part of Solano, Napa, Contra Costa, Lake, and Sonoma counties, is a senior member of the House Committee on Ways and Means and the Subcommittee on Tax Policy.

Contact Rachel Raskin-Zrihen at (707) 553-6824.

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