Farmers, lawmakers want estate taxes abolished

Wednesday, March 7th 2001, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ Robert and Lynda Barnett worry another chunk of their farm will die when they do.

State and federal estate taxes forced Mrs. Barnett and her sister to sell off two pieces of the family ranch in Burlington after their parents died years ago. They were still fighting tax collectors 10 years later.

``They just ate us alive,'' Robert Barnett said Tuesday, surrounded by several state lawmakers, farm officials and Gov. Frank Keating.

The Barnetts were in Oklahoma City to support the governor's push to reduce Oklahoma's estate tax. A bill offered by Democratic state Rep. Clay Pope would make Oklahoma follow the federal government's guidelines on the estate tax.

The federal government does not tax the first $675,000 of an inheritance, which a married couple can double through certain estate planning steps. Under current law, that $675,000 exemption will rise to $1 million by 2006.

Farmers and small businesses already have higher individual exemptions of $1.3 million in 2000, again twice that for married couples with proper paperwork.

Thirty-three states, including all those surrounding Oklahoma, already mirror the federal tax system. Oklahoma follows federal guidelines when direct descendants inherit a family farm or business, but the state starts taxing the first dollar inherited by nondirect descendants, including siblings.

``Death taxes are unconscionable,'' Keating said. ``It is unfair, unwise and wholly burdensome for hardworking Oklahomans to be smacked with taxes at the exact time they are mourning the death of a loved one.''

He said Oklahoma needs to change its tax system so the state doesn't lose its farming families and small business owners and so people aren't discouraged from retiring in the state.

The estate tax sends the message that ``despite all the scrimping and saving people might do to make life better for their loved ones, the taxman is still ready to pounce,'' Keating said.

Pope, chairman of the House Revenue and Taxation Committee, estimated the bill would mean a $40 million to $60 million revenue loss, depending on how many farmers and business owners die each year. The state would have to make up for it by growth revenue or cutting other agencies' budgets, he said.

``I think it comes down to choices,'' Pope said. He said both Democrats and Republicans support the measure.

Scott Dewald, vice president of Oklahoma Cattlemen's Association, said 87 percent of farmers want their children or grandchildren to inherit their businesses. He said the estate tax is forcing farming families to sell off equipment, cattle and eventually their farms.

``We have horror story after horror story after horror story,'' he said.

The drive to change Oklahoma estate tax law is the most important issue this session for the Farmers Union, state Rep. Mason Mungle said.

``We believe that it is wrong,'' he said.

The Barnetts say at least a few of their four children and five grandchildren would love to hang on to the farm.

The family lost a $100,000 home and part of their land already. Another loss likely would end the Barnett farming lineage.