PHOENIX -- Family farms and ranches have been handed down for generations.
It has always been a struggle for survival and the so-called fiscal cliff has been added to the mix. If Congress and the president fail to come up with a budget solution, huge tax increases and spending cuts automatically kick in Jan. 2.
Taxes on inheritance will jump from 35 percent to 55 percent, and the exemption will drop from $5 million to $1 million, bad news for younger farmers and ranchers when their parents pass away and leave them the farm.
"Anything over $1 million will be taxed at 55 percent," said Jim Klinker with the Arizona Farm Bureau. "With land values the way they are, you can go over a million dollars pretty quickly without a very big farm."
Klinker said young farmers trying to hold onto the farm for the next generation would probably have to sell off some acreage to pay the estate tax.
"Young farmers do not have the savings or afford the life insurance premiums to cover the costs of an elderly parent and this puts the whole farm in jeopardy," he said.
There are almost 4,000 cattle ranches in Arizona that raise a total of 900,000 head of cattle each year. Many of the ranchers are third and fourth generation Arizonans.
Agriculture and ranching help make up Arizona's second largest industry and pumps $10.3 billion into the economy annually.
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