The House voted late Tuesday night to avoid the fiscal cliff with an extension of many tax breaks and taxing on the wealthy, as well as a nine-month extension of the 2008 Farm Bill.
The vote went through 257-167 just before adjournment of the 112th Congress. The legislation now heads to President Obama for approval.
According to reports from The Hill, the bill will extend marginal tax rates on family income up to $450,000, and lift capital gains rates to 20%. The bill also delays automatic spending cuts for two months, and will renew tax credits for low-income households.
For the agriculture industry, hot topics surrounding the farm bill and fiscal cliff measures included estate tax and milk price concerns, crop insurance reform and renewable energy policies.
Included in the fiscal cliff deal was long-awaited action on estate taxes. Now, estates will be taxed at a top rate of 40% with the first $5 million in value exempted for individual estates and $10 million for family estates. This is contrary to the 2012 top rate of 35%, but less than the proposed $4 million per couple and maximum taxable rate topping out at 55%.~~~PAGE_BREAK_HERE~~~
Capital gains taxes also change with the new policy – incomes exceeding $400,000 for individuals and $450,000 for families would increase from 15-20%.
A common target for mainstream media in recent days was the milk price issue – what some dubbed the "milk cliff." A reversion to 1949 policy, many said, would cause milk prices to skyrocket due to an impasse on the farm bill and no new policy in sight.
Some reports contend that the milk crisis was enough to spur action on a farm bill extension, included in fiscal cliff negotiations.
Controversy over milk policy is no new issue. This summer, the National Milk Producers Federation stood in support of new policy that would include market stabilization (a type of supply monitoring) and a voluntary insurance program, yet the International Dairy Foods Association long said the program would require too much government intervention.
Congress on Tuesday also approved a reinstatement of the biodiesel tax incentive for 2012 and 2013. The $1-per-gallon incentive was first implemented in 2005, provides an additional $3.1 billion in GDP, according to the National Biodiesel Board.
"It's been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry. But we're pleased that Congress has finally approved an extension so that we can get production back on track," said Anne Steckel, vice president of federal affairs at the National Biodiesel Board.
Farm groups weigh in
Though the cliff was averted just before the end of the year, Congress will again revisit automatic spending cuts in two months' time, adding to rising concerns about raising the debt ceiling. It's uncertain what implications this could have for the agriculture industry, but for the meantime, some farm groups have picked apart the policy, pointing out benefits – and flaws – that they will continue to fight for and against.
National Corn Growers Association President Pam Johnson released a statement Wednesday, explaining that the extension was a "congressional failure."
“America’s farmers have clearly made known the importance and need of a new farm bill in 2012," Johnson said. "Once again Congress’ failure to act pushes agriculture aside hampering farmers’ ability to make sound business decisions for the next five years. The National Corn Growers Association is tired of the endless excuses and lack of accountability. The system is clearly broken."
Though also disappointed about the farm bill extension in lieu of a five-year bill, the American Soybean Association praised the package offered to avoid the fiscal cliff.
"ASA is pleased that the larger package passed by both the House and the Senate to avert the ‘fiscal cliff’, of which the extension was a part, included a meaningful solution to the estate tax challenges faced by farm families and many other small businesses," ASA President Danny Murphy noted in a statement Wednesday.
Murphy promised also that though measures were taken to avoid immediate relapse into outdated farm policy, ASA would continue to fight for a comprehensive five-year bill.
“While the extension is certainly preferable to the alternative of no bill at all, and prevents outdated permanent agricultural law enacted in the 1930s and 1940s from going into effect, it is only a stopgap measure, which does not provide the long-term certainty and stability that farmers need."