Addressing several key tax provisions that affect farmers and ranchers and passing a farm bill are Nebraska Farm Bureau's top priorities heading into the lame duck session of Congress that begins this week
"With the elections behind us it's time to move forward and address the key issues that are creating financial uncertainty for Nebraska's farm and ranch families," says Steve Nelson, Nebraska Farm Bureau president.
Among Farm Bureau's top priorities are numerous tax provisions set to expire at the end of the year, including estate taxes, capital gains taxes, personal income tax rates, renewable energy tax credits and many other tax deductions that affect many farmers and other small business owners.
Without action federal estate taxes will increase from the current rate of 35% up to 55% and drop the current $5.1 million per person exemption to $1 million. "When you consider the increase in the value of agriculture land over the past few years and the realities of an estate tax rate increase and reduction in exemption amount, what we're really talking about is significantly growing the number of farm families that could be forced to sell part of their farm upon death of the owner just to pay federal estate tax," says Nelson.
Another tax provision of concern deals with rates on capital gains taxes, where the rate will increase from 15% to 20% without congressional action. Capital gains taxes hit farmers and ranchers particularly hard because farms and ranches are reliant on large investments in land and buildings that are generally held by an individual for a long period of time over which the value of the assets can increase significantly.
"Capital gains taxes effectively make it more difficult to transfer farm land from older farmers to younger farmers," says Nelson.
Older farmers account for the capital gains tax they will pay when selling their land and the capital gains tax is then reflected in the land price to be paid by the younger farmer. "It simply makes it more challenging on the next generation of farmers and it's important we stay at the 15% rate."
According to Nelson, passage of a 2012 Farm Bill during the lame duck is still a priority for the organization in light of the drought and the fact the 2008 Farm Bill expired at the end of September. While the authorization for current programs expired, most of the commodity programs are not affected until next spring. "We need a farm bill that will restore some of the critical, non-program crop disaster programs that will aid livestock farmers coping with one of the worst droughts in recent history and we need a farm bill that is based on a strong crop insurance program that helps farmers deal with managing their risk," says Nelson.