Submitted by Representative Harold “Jack” Peterman
The legislative session is in full swing and I am hearing from constituents regarding three issues: Delaware’s estate tax, the cut of farmland preservation funds from the state budget, and our participation in a regional carbon cap and trade program.
It is clear the estate tax is a threat to our small businesses and farms. Assets such as land and business investment are taxed at up to 16 percent of appraised value upon the death of the owner. The federal government charges another 35 percent. It is just not fair to work all your life to get the family farm paid off and then the government takes 51%. Remember, the law allows the same family farm to be taxed each time it changes hands. This is not acceptable! The heirs may have to sell the family farm just to pay the taxes. How will children and grandchildren be able to purchase land and equipment like tractors, planters, combines, and seeds of all kinds to plant? Besides that, you still need a home to live in and to raise a family. The rich usually find ways around estate taxes. This is why the estate tax was repealed in 2005.
The legislature, looking for ways to balance the budget, re-instituted the estate tax in 2009 expecting revenue of up to $25 million a year. In the first full year, estate tax revenue totaled just $6.3 million and $6 million of that was one unusually large payment in one quarter. It is unlikely the tax will raise anywhere near $25 million a year. For these reasons, I have signed on as co-sponsor and fully support HB 18 which would repeal the Delaware Estate Tax as of July 1st. I also encourage the United States Congress to abolish the federal inheritance tax on working farms, forests and small businesses.
Farmers can have reduced estate taxes. First they must place their property in the farmland preservation program. Then they can negotiate with the state to sell their building rights. Once building rights are sold, farmers can lower the estate tax but the Governor has cut $10 million in farmland preservation funds from the budget. There are already 99,144 acres in preservation representing $174 million in investment for farms of all sizes from ten acres on up. Another 116 farms would like to sell development rights to the state but there will be no money available. If there was ever a time to buy farmland, it is now. Prices have dropped, so instead of buying 1000 acres, the state could buy 1500 for the same amount.
What is wrong with that? The state would have a great deal, the farmers would love it, and it would benefit everyone to have the land stay in farming. I believe that is the only way that people will be able to stay in family farming in Delaware. I will work with legislators on both sides of the aisle to see this estate tax is permanently repealed and to restore the $10 million in farmland preservation funds to the budget.
If you need more facts on preservation call: (302) 698-4530. In my next letter, I will address the cap and trade program. As always, feel free to contact me with your concerns by phone at (302) 335-4261 or by e-mail at email@example.com.
Representative Harold “Jack” Peterman
595 Log Cabin Road