Tax day has come and gone. And now farmers and ranchers have something to be happy about -- a little more cash in their pockets. USDA economists calculate that farm and ranch families have seen billions of extra dollars from the Jobs and Growth Tax Relief Reconciliation Act of 2003.
"Our economists calculate that the relief has provided about $4 billion in tax reductions for farms and ranches in 2003. This year, we are projecting that it will provide an additional $4 billion," says Agriculture Secretary Ann Veneman.
Veneman adds that almost nine out of 10 farm households are receiving at least some tax relief with an average savings of about $2,000 per farm household per year, or a 16% reduction in the annual tax burden. Most of the benefits come from accelerating reductions from the 2001 tax cut such as lower marginal rates, the increased child tax credit and marriage penalty relief.
According to the analysis, the roughly one third of farm households with taxable dividends, or more than half of all households with a farmer over age 65, are saving an average of about $1,200 through reduced taxes on dividends.
Capital gains reductions are also helping farm families. Nationwide, about 40% of all farmers report some capital gains for 2003. Farmers are about as twice as likely to benefit from the capital gains tax cut as compared to all taxpayers.
In addition, the relief has expanded the amount of capital investments that can be expensed to $100,000, up from $25,000. This year, 90% of all purchases of farm equipment and machinery will be immediately deductible, with 98% of farmers able to deduct their entire investment.
"We need to make these tax cuts permanent, including the repeal of the death tax, once and for all," Veneman says. "Farmers need this stability in planning their long-term operations and our economy needs the positive stimulus the tax cuts have been providing."
Veneman says that the strength in the current farm economy is due in part to the tax reductions, which are also helping drive strong growth in our nation's overall economy as well.