A bill that would repeal a tax on large inheritances is winding its way through Congress, despite concerns about the practicality of such an extension.

Proponents of the bill, H.R. 8, said the estate tax has harmed people’s ability to pass on property and other items of value to their family members, including family farmers.

The bill seeks to repeal the estate tax, which has been in effect since 1916. It would extend provisions in previous bills passed in 2001. The law gradually increases the size of an estate that would be exempt from the tax until 2010, when the tax would be repealed for one year.

This year estates with up to $1.5 million in net inheritances are exempt, said Roger McEowen, associate professor of agricultural law. A couple could own up to $3 million without being taxed.

House Republicans, who refer to the tax as the “death tax,” were among the main supporters of the repeal.

The House passed the bill 272-162 on April 14. Only one House Republican, Iowa’s Jim Leach, voted against it.

Rep. Tom Latham, R-Iowa, said the tax has affected family farms in many ways. He said in a phone interview that he has heard of families who lost their estates in the 1980s, when land values were at an all-time high. In an April 18 newsletter, Latham said a family in Franklin County was forced to sell a 1,500-acre farm so they could afford the taxes.

“I think the death tax is wrong,” he said in the interview. “It taxes people on their hard work. The government steps in and takes more of what they have already worked for.”

Latham said about 70 percent of small businesses and farms do not get passed on to a second generation, and 90 percent do not make it to the third generation because of the tax.

Sen. Chuck Grassley, R-Iowa, said it is necessary to repeal the estate tax because people are already being taxed for their income. He said it was not necessary to tax people twice.

Critics of the tax repeal, however, said it would only help to create large hereditary estates and would do little to help family farms.

Lee Farris, senior tax organizer for the liberal tax watchdog United for a Fair Economy, said although there are a large number of estates that can be taxed, the total tax collected still only comes from the top 1 percent of the nation. Farris said an even smaller amount come from a farm-related background.

Kevin Miskell, vice president of the Iowa Farmers Union, said a farmer would have to own a large amount of land for the estate tax to apply.

“You’d be lucky if there were any farmers in Iowa that would be affected,” Miskell said.

Of the 30,627 estates able to be taxed nationwide in 2003 — the latest data available — only 1,967, or about 6.4 percent, contained some sort of farm property, according to an article McEowen and Neil Harl, distinguished professor emeritus of agricultural law, wrote in a January issue of Agricultural Law Update, an agricultural law industry journal. The bulk of those estates created $10 million in tax revenue, according to the article.

McEowen said it is risky to repeal the tax when there is already a growing national deficit. He said the tax generates an annual income of $20 billion to $25 billion. If the tax is repealed, funding for government programs could prompt an increase in other taxes, he said, which would affect more people.

Another problem with repealing the law is that legislation protects farm assets from taxes if the land increases in value, Farris said.

Regulations protect farmers and family members if the land value increases over the course of a person’s life. Once he or she dies, the land is re-classified at a higher land value, so its inheritors do not have to pay back taxes on the increased price, Farris said.

Latham said he would like to see such protections stay, even if the estate tax is repealed.

Both McEowen and Miskell said they would like to see the tax remain, but with some modifications. McEowen said the exemptions should be raised to $3 million immediately.

Latham said he thought a compromise to raise the exemptions is a likely outcome.

“I think it’s the middle ground,” he said.

Grassley said he would like to see a bill similar to the House’s passed through the Senate. He said it is unclear when the bill would be introduced into the Senate, but an agreement should be reached soon.

“There are a lot of Democrats who are interested in getting the estate tax behind them,” he said.

Sen. Tom Harkin, D-Iowa, was unavailable for comment.