ILLINOIS LAWMAKERS debated several issues last week and will revisit several more when they return for an extended veto session the first week of January. ...............2
THE NEW food safety bill would give the U.S. Food and Drug A d m i n i s t r a t i o n n e w p o w e r s, including the right to make mandatory recalls. ......................................5
EXPANDED TRADE is seen as the key to speeding U.S. economic recovery, a White House staffer and Illinois’ senior U.S. Senator tell farmers. ..............................6
Monday, December 6, 2010
Two sections Volume 38, No. 48
Ag groups make push for estate tax relief Tax task force creation a ‘sign of progress’ BY MARTIN ROSS Farmweek
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As a congressional bipartisan task force grapples with the essentials of lame duck tax reform, prospects may be looking up for some level of estate tax relief in 2011. Mere hours after President Obama met with lawmakers to discuss a possible tax compromise, the American Farm Bureau Federation (AFBF) joined with 30 other ag groups to push for “immediate, permanent, and meaningful” estate tax reform. On Jan. 1, the year-long suspension of the estate tax is to end, with farm families and small businesses subject to a $1 million estate threshold and a high 55 percent top tax rate. At “such a low exemption,” as many as 13 percent of U.S. farming operations with owners passing next year could owe estate taxes, AFBF President Bob Stallman warned at a Washington news conference last week. Because real estate accounts for an average 84 per-
cent of a farmer’s assets, “estate taxes hit farm families harder than other small business owners,” he argued. Rural communities “also suffer when farms and ranches downsize or disappear,” and urban-adjacent farmland sold to settle tax debt often is “lost forever to development,” Stallman said. A higher exemption and lower tax rate offer farmers “a better chance to remain in operation when transferring from one generation to the next,” he said. A newly appointed task force charged with breaking Congress’ tax impasse includes Sen. Jon Kyl (R-Ariz.), sponsor of a $5-million exemption. “We’d like to see this addressed once and for all, but I think our biggest concern is going back to the $1 million exemption and the 55 percent tax rate,” Illinois Farm Bureau President Philip Nelson said. “We’re just going to have to
see what options are available when they’re presented to us.” At the recent Illinois Commodity Conference, Senate Majority Whip Dick Durbin said he is seeking estate tax levels “that are reasonable for business and farms.” “Congress can do it, and only Congress can do it, and we need to do it by the end of the year,” the Springfield Democrat told reporters. Durbin noted reports that some lawmakers wish to see estate tax reinstatement made retroactive (the estate tax expired this year) to capture revenues from families who suffered a death in 2010, but he maintained such a move likely would be “contested in court.” AFBF analyst Pat Wolff sees tax task force creation as “a sign of progress, because of who’s on it.” She noted members also include Senate Finance Chairman Max Baucus (D-Mont.), who has sup-
ported at least a $3.5 million exemption; “very moderate” Rep. Dave Camp (R-Mich.), who will chair the House Ways and Means Committee next year; and Chris Van Hollen (D-Md.), a Democrat House leader who’s steadfastly backed permanent estate tax relief. But the group must reckon with Republicans who favor “straight-out extension” of Bush-era tax cuts (which included estate tax relief) and Democrats who would limit
breaks to couples making $250,000 or less per year. Wolff said she believes Senate Majority Leader Harry Reid (D-Nev.) and lame duck House Speaker Nancy Pelosi (D-Calif.) would back an income limit. Sen. Charles Schumer (DN.Y.) has raised the possibility of a $1 million tax relief threshold to address concerns about middle-income tax consequences while heading off a perceived “millionaire’s tax cut,” Wolff reported. Within that debate, she sees estate tax relief as a “wild card.” While lawmakers could extend most tax breaks conditionally in a “two-sentence bill,” they will not “extend (current) repeal,” Wolff said. But once the larger tax impasse is broken, she believes estate tax relief will become merely “one of many things in a big bill,” and thus easier to move than a standalone measure,” Wolff told FarmWeek.
Senators target ethanol credit as EPA sets 2011 goals As the federal government set the stage for sustained ethanol demand in 2011, a pair of influential senators pushed for elimination of tax credits many see as crucial to continued domestic biofuels growth. Last week, Senate Finance Chairman Max Baucus proposed extending the volumetric ethanol excise tax credit (VEETC) for fuel blenders for one year, at a reduced rate of 36 cents per gallon (see page 4). In an earlier letter to Senate Majority Leader Harry Reid (R-Nev.), Sens. Dianne Feinstein (D-Calif.) and Jon Kyl (R-Ariz.) urged expiration of current ethanol tax incentives. That includes the 45-cent-pergallon VEETC, which is due to expire at the end of this month. The senators called ethanol subsidies “fiscally indefensible.” If VEETC were extend-
ed for five years, oil companies would receive at least $31 billion to use 69 billion gallons of corn ethanol “the Federal Renewable Fuels Standard (RFS2) already requires them to use,” they said. The senators’ proposal to eliminate the credit — as well as a 54-cent-per-gallon foreign ethanol import tariff — “boils down to maintaining the status quo of our addiction to foreign oil,” charged Tom Buis, CEO of the biofuels advocacy group Growth Energy. Mark Marquis, president of Hennepin-based Marquis Energy, agrees the credit “needs to be revamped” next year but argues immediate extension is crucial to provide “clarity” for ethanol producers, fuel suppliers, and consumers in the year ahead. Last week, the U.S. Environmental Protection Agency (EPA) announced the total RFS2 requirement for 2011
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will remain at 13.95 billion gallons, including 12.6 billion gallons of corn-based ethanol and 6.6 million gallons of cellulosic biofuels — the latter number far lower than original targets. Marquis reported his ethanol operation is operating at “well over design capacity, producing fuel, raising the price of corn for farmers, and creating jobs for the community.” Profit margins have been favorable for months “and we’re looking forward to 2011 in the ethanol space” — that is, if demand continues to grow amid a still-struggling economy. “I think the VEETC will need to be adjusted in years to come, but we’ve gotten down to the last minute here, and we want to maintain the good improvements we’ve seen in fuel supply we’ve seen from our home country,” Marquis
told FarmWeek. “I think the VEETC will need to be extended in order to keep some continuity for ethanol producers.” National Renewable Fuels Association (RFA) President Bob Dinneen sees EPA’s decision to reduce short-term biomass biofuels targets as “accurately reflecting the difficulties cellulosic biofuel technologies have encountered in obtaining the capital needed to fully commercialize.” But Dinneen urged EPA “to keep cellulosic biofuel targets ambitious so as to stimulate the kind of investment these technologies need to finish commercialization.” While biomass ethanol’s separate blender credit currently does not expire until 2012, Marquis sees corn ethanol — and corn ethanol support — as a “launching See Credit, page 4
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