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Mar 24, 2009 1:19 PMPublication: The East Hampton Press & The Southampton Press

Bishop plan would halt estate tax on farmers

Mar 24, 2009 1:19 PM

Exorbitant estate taxes have been cutting the ties between farming families and the East End for generations, but U.S. Representative Tim Bishop is hoping to change that this year by altering the federal tax code.

The change would allow the few remaining farmers here on the East End to pass their land on to their children without forcing an estate tax payment that runs as high as 55 percent of the value of the land. Mr. Bishop introduced the bill, The Farmland Preservation and Land Conservation Act of 2009, on Thursday, March 5. It was then referred to the House Committee on Ways and Means.

Three times since he became a congressman in 2003, Mr. Bishop has submitted variations on a plan to defer estate taxes on farmland, as long as the land is still used for farming. He said this week that he hopes to include the farmland measure in estate tax legislation that Congress must act on either this year or next.

“This is a bill that John Halsey and I have been talking about since I was a candidate seven years ago,” said Mr. Bishop, referring to John v.H. Halsey, the president of the Peconic Land Trust. “We tried to involve all of the players that are stakeholders. A larger estate tax legislation has to move this year or next. That’s an imperative. I am hopeful of attaching this as a provision to the larger bill.”

Currently, farmers are allowed to pass their property to their spouses when they die without incurring estate taxes, but when both parents have died, their children are often faced with a brutal choice. The heirs must either pay what could be millions of dollars that they most likely don’t have based on the “highest and best use” of farmland—which means what the land would be worth to developers building huge mansions and subdivisions—or sell the land to those developers in order to pay the estate tax.

While the estate tax problem for farmers is not unique to Long Island, it is a significant issue in farming communities in coastal regions that are within commuting distance of major metropolitan areas.

“This is legislation that would probably not have a great impact in the interior of the country,” said Mr. Bishop.

Mr. Halsey weighed in on the specific ramifications for East Enders.

“This legislation is critical to ensure that land of conservation value—including working farms, forests, watersheds and shorelines—is not lost due to federal estate taxes, or the anticipation of such taxes,” he said. “Keeping our resources intact, especially those close to major metropolitan areas where land values are high, will assure that our cities and communities have regional food, water, and recreation for generations to come.”

Lee Foster, who farms 150 acres in Sagaponack along with her husband, Cliff Foster, and her children Marilee and Dean, said she has been waiting for a change in the estate tax for farmers since Walter Mondale first proposed such a change in the tax code when he was a senator in the mid-1970s.

“The concept of estate taxes, back to the mid-1930s, was that you will have to sell the farm, as long as the assessment for estate tax always goes to the highest and best use. It’s become more brutal as values have escalated,” said Ms. Foster. “Tim Bishop’s legislation is long overdue and probably is going to need enormous amounts of pressure behind it so that it can move because of all of the other aspects of the economy.”

Ms. Foster said that all other land preservation programs—from the Community Preservation Fund, to transfers of development rights, to the creation of agricultural districts—are inadequate to deal with the fundamental problem that farmers face when they try to pass their farms on to their children or sell them to other farmers.

“They’ve tackled the problem, but they haven’t brought the ball to the goal line,” she said of the programs that have been implemented so far. “Farming is a resource that we are ignoring. ... The highest and best use is growing things. His legislation would really allow land to go generation to generation and farmer to farmer. But as soon as you put a subdivision on it, it’s time to pay the piper. There is not a farmer alive who wants to sell development rights if he doesn’t have to.”

“When I’m sitting on that tractor and I think about how I’ve gotta sell this to pay some crooks in Washington, my blood pressure goes up,” said Dean Foster. “I don’t see how I should pay to have my mommy and daddy die. The foundation of this country is the ability to produce food for itself first. I go to bed at night scratching my head. For us to go to work all day and to come back home to work to devalue the farm, that’s disgusting and it should be unconstitutional. ... I’m going to fight to the death over this.”

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I am tired of the whining of farmers children wanting to be "landed millionaires" by refusing to give up their development rights. They want to have their cake and eat it too! Donate the development rights to the land trust and you can farm the land forever.
What these people want to do is farm "forever" or until no one in the family wants to anymore, then still be able to sell the land to developers. Just because your family has owned the land for hundereds of years doesnt make you an exception. ...more
By luvthehamptons (1), South on Mar 27, 09 1:32 PM
^ the town is currently not offering a fair value for the development rights, and could not afford to buy all of the rights if it was offered to do so anyway.

I see this as a great proposal. Good luck Mr. Bishop.
By C Law (354), Water Mill on Apr 2, 09 11:21 AM