Farm estate tax breaks put out to pasture?
A bill to provide tax relief to relatives who inherit family farms hasn't moved out of either legislative committee considering it, despite bipartisan support that includes a freshman Republican lawmaker and Gov. Martin O'Malley.
Environmentalists and farmers alike praise the idea as a way to preserve open space and foster agriculture. But any tax break comes with a price tag, and that appears to be what's weighing on the members of the House Ways and Means Committee and the Senate Budget and Taxation Committee.
"There's uncertainty about the cost," said Joseph Bryce, O'Malley's top legislative aide. The bill's fiscal note shows it could cost the state more than $2 million per year.
Under the proposal, heirs to agricultural land who pledge to use it as a working farm for at least 10 years would be exempt from the first $5 million in estate tax. They'd pay a 5 percent rate -- far lower than the 16 percent now on the books -- on any additional value.
O'Malley made a personal plea for the proposal in the Senate, where it was sponsored by new Sen. Ron Young, a Frederick County Democrat. Agricultural Secretary Earl F. "Buddy" Hance voiced support at the House hearing.
Del. Kathy Afzali, a freshman Frederick County Republican, said she won over the administration by pulling the bill from her purse when she encountered O'Malley and Hance at a February dinner for farmers.
Afzali, Young and O'Malley aides met recently to try to come up with a way to pay for the tax breaks, Bryce said. An idea to use agricultural land preservation funds fizzled because that program is bonded and has no cash.
Likely, the cost would need to be covered by thinly stretched $14.6 billion general operating budget.
In addition to the payment problem, there could be political maneuvering in the works.
Afzali said she'd heard talk of trying to tie the estate tax breaks to the governor's effort to curb septics at new developments. And Young said some had floated the idea of coupling the tax breaks with a bill concerning development rights for farmland.
Young said he remains hopeful the estate tax break proposal will gain passage on its own. But, he said, "it's hard to tell what someone is discussing behind closed doors."
Comments
Somebody needs to get a clue - not collecting revenue by not taxing someone doesn't COST anything. The state does not SPEND money to let this happen and keep farms and green space.
Adjusting your revenue estimate because of a change isn't the same as spending money. By this logic, how much did the "millionaires tax" increase COST Maryland when the revenue from "millionaires" dropped?
Posted by: Don Barr | April 1, 2011 12:57 PM
How unbelievably shortsighted...some of these landowners are going to choose to sell their land to developers rather than pay taxes. Once the land is developed, the cost of infrastructure such as underground utilities and roads will probably be more than the money they collected in the first place.
Here's a novel thought: let government make do with less money, and come up with better strategies to preseve open spaces.
Posted by: JSS | April 4, 2011 9:38 AM
IMHO, this would be one of the best ways to preserve our agricultural community, reducing the tax burden on surviving farm families.
Don, I also love how the government spins another "tax break" as a COST to the government. What generous souls... going to great lenths to let us keep a little more of our hard earned salaries.
Posted by: RD | April 4, 2011 3:30 PM
From the time we started walking we spent endless hours working in the fields for no pay so we could have a place to call our own. Now there is chance we would have sell the farm just to pay taxes. Is this a great country or what.
Posted by: CC | April 4, 2011 6:46 PM