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The Negative Effects Of Estate Tax On Farmers Of Illinois


Across the world, governments raise revenue through various types of fees. For instance, in the United States estate tax is one of the common taxes. It is a tax levied on the transfer of properties such as land, real estates or other assets upon the death of the owner. In Illinois State, the estate taxes are levied on property whose value is more than $ 4 million. This paper explains why estate taxes are bad for farmers in Illinois.

Illinois is among the most populous states of USA with many industries concentrated on agricultural productivity. Farm products such as soybeans and corn are widely grown in large-size farms with most citizens doing farming on a large scale as the primary economic activity. Agriculture accounts for much of the output of the state of more than 76,000 farms covering an approximate area of more than 28 million acres. Generally, Farmers and owners of large tracts of lands are usually more likely to be subjects of the federal estate tax or rather still the Illinois estate tax.

Considering the nature of farming and ranching, most of the assets are illiquid such as land and barn as revealed by a USDA survey in 2010. In addition, most farms are family owned and the estate tax bills always cause “the break-up of multi-generational family farms”(Scholl Jon) and consequential loss of their farmlands to developers through sale. With this fact in mind, it is evident that there are lasting negative consequences for the farmers in Illinois caused by the estate taxes. The taxes, therefore, make it difficult for family members to inherit the farm-lands and even continue with the productive exploitation of such farms since some of them end up selling such farms to cater for the estate taxes.

Once one has accounted for the Gross Estate, various deductions are usually done in order to arrive at the taxable estate value of the farms. These deductions may include estate administration costs, debts and processing fees. These deductions have an effect of reducing the value of the farms and consequently discouraging the inheriting farmers who resort to the sale of such lands to avoid subsequent estate tax in the future.

Therefore, estate taxes in Illinois have an adverse effect on the farmers, from reducing value of their farms, making it difficult for inheritances and finally leading to the collapse of family farms doing more harm than good to the farmers.

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