Owners of farms and small businesses would escape the federal estate tax under a bill introduced Wednesday by Rep. Jerry McNerney, D-Pleasanton.
The measure aims to protect owners of these enterprises from a tax that is scheduled to rise to 55 percent on estates in excess of $1 million in 2011.
"I've met with farmers, ranchers, growers and small-business owners from all across our area who are concerned about burdening their loved ones with a devastating tax when they pass their businesses and farms on to the next generation," said a news release from McNerney, whose district includes most of San Joaquin County.
Legislation enacted in 2001 started a decadelong phaseout of the tax, including an increase in exempted assets to $3.5 million this year.
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The tax is scheduled to disappear in 2010 but revert to its original level in 2011. The initial estate tax relief bill had a 10-year-sunset that expires next year.
McNerney's bill would eliminate the tax on farmland that remains in operation and is passed down from one generation to another. It would do the same for small businesses worth up to $8 million.
The bill also would cut the tax for other business owners by 10 percent and reduce the number of affected families.
"I'm thrilled that Congressman McNerney is leading the way with legislation that will lift the burden of the estate tax off the backs of family farmers," said David Phippen, a Ripon-area almond grower and processor, in the news release.
"Agriculture is a major economic engine and supplier of jobs in San Joaquin County. The entire area suffers when a farmer is forced to sell land and lay off employees because of the estate tax."
Opponents of eliminating the tax argue that it applies to a very small percentage of business owners. The critics include the Center on Budget and Policy Priorities in Washington, D.C., which contends that the resulting budget deficits would slow economic growth.
Bee staff writer John Holland can be reached at firstname.lastname@example.org or 578-2385.