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Easing estate taxes on farms favored; snack tax opposed

A bill sponsored by Gov. Martin O’Malley that would help save family farms and preserve Maryland agriculture by increasing farm estate tax exemptions met with little opposition in a hearing by the House Ways and Means Committee on Tuesday.

Perhaps not by accident, the hearing coincided with Farm Day in Annapolis. The committee heard testimony from a number of farmers and agricultural representatives, including O’Malley’s Secretary of Agriculture, Earl Hance, who testified on behalf of the governor’s bill.

“It eliminates some of the stress that comes with generational transfer at a time when most farmers are land rich and cash poor,” said Hance.

O’Malley’s proposed bill, which is nearly identical to two other bills being considered by the committee, would grant an exemption to the state’s estate tax for farms valued up to $5 million, under the agreement that the land remains agricultural. The legislation hopes to provide a safety net for family farms, which often face liquidation at the passing of a relative when the state’s 16% estate tax is imposed.

Moreover, the legislation would impose a 10-year “recapture law,” allowing the state to reclaim those tax benefits if agricultural land is used for other purposes within a decade of the owner’s death.

Some lawmakers voiced concerns that 10 years was not a long enough recapture period, citing that many farms have been in families for hundreds of years. But few were opposed to a measure that has been introduced repeatedly.

Snack tax opposed

That discussion was in stark contrast to a snack tax proposed by Del. Jay Walker, D-Prince George’s. The bill would collect the state’s 6% sales tax on foods like potato chips, pretzels, and cheese puffs. Such a law would generate $13 million annually for the general fund. Noting the growing problem of childhood obesity, Walker hopes to deter consumption of junk foods.

The bill faced fierce opposition from several members of the food and grocery industry, as well as conservative members of the committee. Del. Joseph Boeteler, R-Baltimore County, blasted the bill for “attacking an industry that is putting out a legal product.”

Opponents argued that when it comes to issues concerning obesity, preventive measures ultimately come down to education rather than taxation.

This is not the first time the state has considered a tax on snack foods. A similar law was enacted in 1991, but later repealed in 1997 after the opening of a Frito-Lay factory in Harford County.

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