DENVER Farmers who inherit land would get a break on their Colorado estate taxes under a bill that advanced Wednesday.
But the U.S. Congress might make the bill a moot point before it has a chance to take effect.
The sponsor of House Bill 1042 is Rep. Sal Pace, D-Pueblo, who is running for Congress against U.S. Rep. Scott Tipton, R-Cortez.
Pace said he is sponsoring the bill in order to prevent the loss of farms and ranches to suburban development.
When ag land is subdivided, its awfully difficult to develop it as agricultural land later on, Pace said.
Landowners would have to keep their farms in production for at least 10 years if they receive the credit.
Republicans on the House Finance Committee, however, embraced the bill because of their opposition to estate taxes in general.
My only concern with the bill is its not open to everybody, said Rep. Brian DelGrosso, R-Loveland. I think the death tax is one of the worst taxes we have.
The federal estate tax which Republicans call the death tax is currently suspended. When it is in effect, Colorado also charges an inheritance tax, but the state tax is subtracted from the federal tax bill.
HB 1042 would offer a refund on the full amount of state inheritance taxes if the federal tax is ever re-instituted. It would cost the state $2.6 million a year, according to the Legislatures budget experts.
The federal estate tax is scheduled to return in 2013, but observers expect Congress to either delay or lessen the tax sometime this year.
Paces bill passed 10-3, thanks to unanimous support from the panels Republicans. Three Democrats opposed it because of the potential cost to the state budget.
In this time of budget crunch, I dont think its responsible to cause the state to lose millions of dollars, said Rep. Beth McCann, D-Denver.
The bill now goes to the House Appropriations Committee, and Pace pledged to find a way to pay for it before its next hearing.
