Maryland's estate tax penalizes aging farmers

January 20, 2012

As a general rule, I am opposed to tax breaks that favor specific groups of taxpayers (e.g. those with mortgages, those who can afford to make generous charitable contributions or — my all time favorite — commuting federal government workers).

However, in the case of estate tax breaks for farmers, I make an exception. Ideally, Maryland would eliminate or significantly reduce its onerous estate tax to stem the exodus of wealthy retirees to Florida and other states with no or low estate taxes. Regrettably, that dog won't hunt in this state.

Unlike many wealthy Marylanders retirees, who can sell their homes and easily take the bulk of their assets with them, independent farmers have their wealth tied up in their land, which cannot be moved. As a result, they cannot escape the long arm of the Maryland estate tax collector even if they relocate.

Moreover, the value of their land as farms is likely to be less (in some cases far less) than the value of that land as home developments or shopping centers.

All of which raises an interesting question. If you were an aging Maryland farmer with a farm that could be sold to a developer for $5 million, would you sell it, pay the capital gains taxes (if any) and head for Florida — or would you continue to farm until you drop, leaving your children with a $640,000-plus tax bill and a farm that, as a farm, is probably not worth $5 million?

Unless farming is in your blood and the blood of your children, the answer is a no brainer.

Bob Price, Lutherville

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