Lack of Estate Tax Reform Puts Family Farming at Risk

Illinois House Republicans have made continuous efforts to reduce or eliminate the burdensome ‘Estate Tax,’ known also as the ‘Death Tax’. An estate tax is a tax paid by the estate of a deceased person after all debts to the private sector have been paid. In the states like Illinois, payment of an estate tax is an essential part of the probate process.

The Illinois Estate tax solicits approximately $547 million per year in revenues for the state by making death a taxable event. The largest part of this tax falls on property that cannot be moved out of state, including houses, small businesses, and farmland. 

Nearly 70,000 families own and operate 96 percent of the farms in Illinois, and all of these families are faced with questions when it comes to succession or transition plans for the business. The looming effects of the estate tax can force families to address future plans through gifting, discounting, leasing, or some other method.

The threat for family farms and small businesses to either shutter or leave the state due to the estate tax is real. Several states that border Illinois, such as Indiana, Missouri, and Wisconsin, do not charge an estate or inheritance tax, and Iowa’s is being phased out.

There are a number of negative effects of having a reduction in the number of family farms in Illinois. These farms play a crucial role in ensuring food security while providing a diverse range of fruits, vegetables, grains, dairy, and meat. They are an essential component of a diverse and resilient agricultural system that benefits society as a whole.

Research indicates that every year, Illinois farmers have to sell acreage and business owners have to sell company assets because a disability or death occurs. A farm or family business should not be at risk of being lost due to the estate tax.

Family farming, it should also be noted, is a significant driver of economic development, particularly in rural areas. It provides employment opportunities, generates income, and supports local businesses and services. Family farmers often have a deep connection to the land and a long-term commitment to sustainable agricultural practices. Farmers tend to manage their farms with an emphasis on environmental stewardship, such as soil conservation, water management, and biodiversity preservation. They also maintain open spaces, wildlife habitats, and ecosystems.

Family farms often prioritize quality over quantity, focusing on producing nutritious, high-quality food. This allows consumers to have access to fresh, locally-produced food, and that contributes to healthier diets while supporting local food systems.

By supporting family farms, consumers are promoting vibrant rural communities, protecting the environment, preserving cultural heritage, and ensuring access to high-quality, locally-produced food.