Congress’ new tax package was an early Christmas gift for fruit and vegetable growers such as Maureen Marshall, vice president of Torrey Farms Inc. in northwest New York state.
The deal includes a reduction in the estate tax rate for the next two years, which Marshall said will ease the financial hit from passing family-owned farms such as hers along to heirs. A burdensome estate tax raises questions whether an operation like Torrey Farms can be kept intact, she said.
“We’ve spent the last 40 years building this business,” said Marshall, 58, who co-owns the farm, in its 11th generation of ownership, with two brothers. Torrey Farms grows cabbage, onions, potatoes and other vegetables on nearly 10,000 acres near Elba, N.Y.
“You’re looking at tough decisions,” she said.
Marshall was among many growers who welcomed the tax package, which the House and Senate approved before adjourning in mid-December .
The deal extends Bush-era cuts until 2012, with the estate tax dropping to 35% next year from 45% in 2009. Congress allowed the tax to lapse for 2010, though it was set to rise to 55% in 2011. Also, the estate tax threshold will rise to $5 million from $3.5 million in 2009.
Tom Stenzel, chief executive of the United Fresh Produce Association, Washington, D.C., said many fresh produce businesses have most of their assets tied up in farmland and facilities that have been family-owned for years.
“The estate tax provisions in this bill will help many of our members who want to pass along family businesses and farms to their children, without having to sell their assets just to pay a death tax,” Stenzel said in a statement after the bill’s passage. Estate tax reform is “especially critical for these family businesses to survive.”
Like many growers, Marshall would like to see the estate tax repealed. She worries whether the six children between her and her brothers will be able to continue running Torrey Farms.
“We’ve only got a two-year window before it could get worse,” she said.
“Unfortunately, Congress sees (the estate tax) as a moneymaker.”
Hand-wringing over potential estate tax liabilities is also common in other parts of the country, especially in California.
Aram Kinosian, co-owner of Sundale Vineyards & Cold Storage, Tulare, Calif., is pleased with the new tax deal, saying it gives his family company greater confidence to move forward with expansion.
Sundale plans to spend $4 million to $5 million to boost storage capacity 25%, Kinosian said. The company, founded in the 1930s, raises table grapes on 2,500 acres and sells about $45 million of the fruit each year.