November 17, 2010
www.gfb.org
Vol. 28 No. 46
CONGRESS PONDERS NUMEROUS TAX PROVISIONS IN LAME-DUCK SESSION Estate taxes will be among the more than 140 expired or expiring tax provisions under consideration during the lame-duck session of Congress that began Monday. For the year 2010, no estate tax has been in effect but without congressional action it will be reinstated with a $1 million per person exemption and a top tax rate of 55 percent with stepped-up basis. The House passed a bill to provide a $3.5 million per person exemption and a top rate of 45 percent in December 2009. Sens. Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.) submitted a proposal, which was favored by Farm Bureau, that would phase in a $5 million exemption with a 35 percent top rate, but the Senate has yet to consider it. The Joint Committee on Taxation lists 72 tax provisions that expired at the end of 2009 and 69 that will expire at the end of 2010. The House and the Senate both passed bills extending the expired provisions from 2009, but have been unable to agree on final legislation. Farm Bureau supported the extension of several of these provisions, including production credits for biodiesel and renewable diesel fuels, five-year depreciation for farming business machinery and equipment, deduction of state and local sales taxes, additional standard deduction for state and local property taxes, above-the-line deduction for qualified tuition and related expense, a provision encouraging contributions of conservation easements, enhanced charitable deduction for contributions of food and a short line railroad track maintenance credit. Farm Bureau also supports special tax treatment of certain payments to controlling exempt organizations, including Unrelated Business Income Tax (UBIT) rules for interest, rents, royalties and annuities received by a tax-exempt entity from a controlled entity. Expiring 2010 tax provisions for which Farm Bureau supports extension include a top capital gains tax of 15 percent, reduced personal income tax rates, the Volumetric Ethanol Excise Tax Credit (VEETC), marriage penalty tax relief that would keep the deduction for married couples at twice the amount for single taxpayers, a hold harmless provision for the Alternative Minimum Tax, keeping the amount eligible for section 179 deductions at $250,000 and keeping the exemption for National Health Service Corps Scholarship Program, which keeps medical scholarships for those willing to practice in underserved areas exempt from taxation. Without congressional action, the personal income tax bracket currently at 10 percent will increase to 15 percent, the 25 percent bracket will increase to 28 percent, the 28 percent bracket will move to 31 percent, the 33 percent bracket will increase to 36 percent and the 35 percent bracket will increase to 39.6 percent.