By Cole Lauterbach/Illinois Radio Network
SPRINGFIELD – Illinois collected more than $1.5 billion from taxing assets that are handed down from generation to generation, according to the past five years of data, a practice that advocates for farmers say can cripple the family business.
Twelve states and Washington D.C. tax inheritance, according to the Tax Foundation. In Illinois, it’s called the estate tax. It kicks in at $4 million and has rates up to 16 percent. While many Illinoisans don’t expect to inherit that much, the value of farms passed down through generations can easily surpass that.
“Just like small businessmen, farmers can be considered asset rich, but cash poor,” said farmer Dennis Verbeck, who is president of the Henry County Farm Bureau.
State Rep. Charlie Meier, R-Okawville, also farms the southern Illinois ground his family has owned for more than a century. He said the farmland has already been taxed.
“We don’t think of [farmland] as an asset. It is a family member,” he said. “It is the one that has provided for this family for generations.”
Verbeck said today’s tight commodity market is leading to farms being sold off when they’re hit with an estate tax charge.
“I know of four farms this year that don’t have the financing and are going to have to liquidate,” he said.
The Illinois Farm Bureau has long advocated that Illinois address the estate tax and its effect on family farms.
“Corn and soybean production have been very difficult, meaning farmers are not sitting on a lot of cash needed to potentially pay these large tax bills,” said Bill Bodine, associate director of state legislation for the Illinois Farm Bureau.
Similar to a federal tax bill, Illinois allows incremental payments of an estate tax bill.
There has been a recent shift away from the estate tax. Indiana repealed its estate tax in 2013.
The federal government doubled the threshold in which the tax takes place as part of last year’s tax code overhaul.
Springfield has yet to act on bills filed this session that would mitigate these taxes. Opponents of repealing an estate tax point to a historical inequality bred by generations of wealth passed down to heirs.
Attorney General collections of estate tax by year.
- 2012 – $273 million
- 2013 – $243 million
- 2014 – $317 million
- 2015 – $341 million
- 2016 – $317 million
