December 15, 2010
www.gfb.org
Vol. 28 No. 50
CONGRESSIONAL LEADERS REACH TAX AGREEMENT WITH WHITE HOUSE The Obama administration last week reached an agreement with congressional leaders to extend expiring income tax cuts and settle a number of other tax issues, including an establishment of estate tax rates for which Farm Bureau and other agricultural organizations have voiced support. The House last week passed H.R. 4853 by a 234-188 vote. The Senate was expected to vote on companion legislation this week, though some House Democrats were pushing for changes. The bill extended tax rates enacted during the presidency of George W. Bush and set the estate tax exemption at $5 million per person ($10 million per couple) with a top tax rate of 35 percent and indexed for inflation, matching a proposal earlier this year by Sen. Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.). Farm Bureau maintains that the estate tax issue is crucial for the nation’s farmers. “Individuals, family partnerships and family corporations own 98 percent of our nation’s 2 million farms and ranches and generate 86 percent of the food and fiber produced in our country,” American Farm Bureau President Bob Stallman wrote in a letter to the group of congressmen who negotiated the tax deal with the White House. “When estate taxes on an agricultural business exceed cash and other liquid assets, surviving family partners can be forced to sell land, buildings or equipment needed to keep their businesses operating. This not only can cripple a farm or ranch operation but also hurts the rural communities and businesses that agriculture supports.” The estate tax was repealed for 2010, but without legislation by the end of the year, the estate tax exemption would revert to 2001 levels, with a $1 million exemption and a top rate of 55 percent. Without passage of tax legislation, the expiring tax rates would also result in income-tax increases in every bracket for 2011. H.R. 4853 carried a number of other provisions supported by Farm Bureau, including an extension of capital gains tax rates for all taxpayers through 2012, extending through 2011 tax incentives for production of biodiesel fuel, a one-year extension of tax incentives for the production of ethanol, a tariff on imported ethanol, and a one-year extension of the alternative fuels tax credit for liquid fuels derived from biomass and other sources. Under the bill, the Alternative Minimum Tax relief is extended through the 2011 tax year, and the higher Section 179 small business expensing provisions are extended through 2012. Also extended are expanded child and dependent care tax credits, marriage penalty relief and others.