On Friday Rep. Mike Thompson (CA-05) introduced his proposal to protect families who want to pass their farm or business to the next generation.

The Family Business Preservation Estate Tax Act would create a deduction to allow families to pass their business onto their descendants as long as it remains with the family.

“Building a legacy for your children and grandchildren is a key part of the American Dream, and families deserve to know they won’t lose what they’ve built – especially after losing a loved one,” said Thompson. “Many family farms are rich in land but cash poor. A major tax on their estate could force them to sell off the very assets they worked so hard to build. That isn’t right. While some have proposed simply wiping out the estate tax altogether, we should address this specific issue without creating a new fiscal hole by fully repealing the tax.”

He added, “There’s a better way. We can protect farms and family businesses. We can be fiscally responsible and compassionate to families who want to preserve their legacy. We don’t have to throw the baby out with the bathwater by repealing the entire estate tax. We can address specific concerns, solve problems, and protect family legacies.”

Currently, the estate tax applies on estates valued at over $5.49 million for an individual and $10.98 million for a married couple.

Thompson’s proposal would create a deduction of up to $5.49 million – indexed for inflation – for family-owned businesses, and family-owned farms would also have the option to deduct the entire value of their farmland.

Families could benefit from the deduction as long as they continue to operate the business for at least 10 years.

Thompson is a senior member of the House Committee on Ways and Means and the Subcommittee on Tax Policy.

Congressman Mike Thompson represents California’s Fifth Congressional District, which includes all or part of Contra Costa, Lake, Napa, Solano and Sonoma counties.