August 1, 2012
www.gfb.org
Vol. 30 No. 31
FARM BILL ON HOLD; TAX BILLS INTRODUCED IN U.S. HOUSE The U.S. House has scrapped plans to vote on a one-year extension of the 2008 farm bill. According to media reports, the House was prepared to vote on an extension that included disaster relief provisions on July 31, but abandoned that plan. Congress is scheduled to adjourn on Aug. 3 for a monthlong recess. By law, Congress must enact a new farm bill or extend the 2008 farm bill before it expires on Sept. 30. Two bills addressing tax issues were introduced in the House on July 30, one to revert federal estate taxes to 2009 levels and one to extend expiring tax cuts for individuals with household incomes below $250,000. The estate tax bill, H.R. 16, would reinstate the 45 percent top tax rate for federal estate taxes, with an exemption of $3.5 million per person. H.R. 16 was introduced by Rep. Sander Levin (D-Mich.) and had 12 cosponsors, including Rep. John Lewis (D-Ga.). The bill was referred to the House Budget Committee and the House Ways and Means Committee. Without congressional action, the estate tax would move to 55 percent and have a $1 million exemption per person on Jan. 1, 2013. The current estate tax scheme, which was passed in late 2010, includes a $5 million exemption and a top rate of 35 percent. American Farm Bureau favors abolishing the estate tax, and bills to repeal estate tax were introduced in the House and Senate earlier this year. The tax cut extension bill, H.R. 15, was also introduced by Levin and had 26 cosponsors, including Lewis. H.R. 15 is identical to the tax cut bill (S. 3412) passed in the Senate on July 25. It extends tax cuts passed in 2001 and 2003, which were scheduled to expire at the end of 2012. S. 3412, which was opposed by American Farm Bureau, was introduced by Senate Majority Leader Harry Reid (D-Nev.). The bill had no provisions addressing the estate tax. Meanwhile, a report published on July 25 by the Joint Economic Committee details the financial harm posed by estate taxes on family businesses. According to the executive summary in the report, the cost of the estate tax far exceeds any benefits it produces. The report indicated that “the estate tax is an overwhelming cause of the dissolution of family business,” and “is a significant hindrance to entrepreneurial activity because many family businesses lack sufficient liquid assets to pay estate tax liabilities.” The report also cited studies indicating that the abolition of estate taxes would increase overall federal tax revenue. To view the complete report visit http://tinyurl.com/c53r86k.