President Trump defends ‘death tax’ exemptions for farmers

The UK farming sector has heaped praise on US president Donald Trump after he strongly defended the principle of exempting farms from “estate tax” – the US equivalent of inheritance tax (IHT) – during an exchange with UK prime minister Sir Keir Starmer.

The two were hosting a press conference on Monday (28 July) at Mr Trump’s Turnberry golf course in south-west Scotland.

See also: Record farm closures amid IHT reforms and rising costs

Asked about the importance of farmers to a country, especially in the context of IHT treatment, Mr Trump said he loved farmers, but they were often “land rich and cash poor”.

“So in our tax bill we have a clause that is very important,” he said.

“We were losing a lot of farms to the banks because a loving mother and father would die and left their farm to their children.

“But they had a 50% tax to pay. They would then go out and borrow money to pay the estate tax – or the death tax as it’s called – and they would overextend and they would lose the farm.”

Mr Trump added that many farmers in the US had taken their own lives because of the estate tax.

“So we have totally ended the estate tax.

“When a parent leaves a farm to the kids, they do not have to worry about their local banker coming in and stealing their farm.” 

‘Different situation’

Sir Keir was quick to defend the UK government’s position, saying the UK Treasury’s 20% IHT proposal was very different.

“Our levels are nowhere near 50%,” he said.

“We’ve just introduced [a system] where it is paid over many years and works out at an extra 2% a year over 10 years.

“The other thing we’ve done, as you know, is make sure we have a pathway for farmers which actually increases their year-on-year income, which is the most important thing.”

Sir Keir added that farmers were a prime consideration in the government’s trade deals – such as the UK-US trade deal – to ensure their incomes were protected.

Industry response

A number of commentators have pointed out that Mr Trump’s claims to have ended estate tax were exaggerated.   

NFU deputy president David Exwood said on social media that, while the US did actually charge estate duty, it was only above a threshold of $15m per person (or $30m per couple) compared with the UK’s proposed £1m threshold for agriculture. “A £1m limit here is way too low!” he said.

Others have been quick to praise Mr Trump for significantly raising the thresholds for estate tax to a point where very few farms need to pay it (although some individual states have different arrangements).

NFU president Tom Bradshaw said: “While the farming environment in the US and UK are very different, farmers in both countries are land rich but cash poor, and the president was right to point that out.

“The US recognised that such a tax wasn’t conducive to running family businesses and producing food, and that it was having a detrimental impact on farmers’ wellbeing. As is right in that situation, it took action to rectify the policy.”

Mo Metcalf-Fisher, director of external affairs for the Countryside Alliance, also applauded Mr Trump’s comments, defending family farms from the threat of estate tax.

“I only hope that Keir Starmer takes note and finally engages and works with the British farming community to find a solution that will not cause destruction to the farming sector and rural communities,” he said.