During its upcoming lame-duck session, Congress has some big policy moves to make. At the top of lawmakers’ to-do list, farmers and ranchers say, should be the farm bill and estate and capital gains taxes.
Many of the provisions of the 2008 farm bill expired on Sept. 30. Most farmers are okay for now because the 2008 bill covers the 2012 crops, not just fiscal 2012. However, dairy farmers are struggling without a Milk Income Loss Contract program, which expired at the end of September.
And even growers who are currently feeling few effects of not having a farm policy in place are at a loss in terms of planning for the future.
Just before Congress adjourned in October, hundreds of Americans, including farmers, congressional members and leaders from agriculture, conservation, energy, consumer and nutrition organizations, gathered on Capitol Hill at the Farm Bill Now rally. They called on lawmakers to pass a new, comprehensive, five-year farm bill. Such a bill, Farm Bureau says, is necessary to ensure stability for growers and allow them to plan for the future.
The Senate passed its version of the farm bill in June and the House Agriculture Committee approved its own legislation the following month. Farmers and ranchers had hoped to see Congress compromise on the two measures before heading home in the run-up to the election.
“Now it’s a lame duck must-do,” said Dale Moore, American Farm Bureau Federation policy specialist.
Sen. Debbie Stabenow (D-Mich.), chairman of the Senate Agriculture Committee, said she thinks there’s a good chance Congress will get the farm bill done, after House Majority Leader Eric Cantor (R-Va.) said in late October that the House would vote on a measure after the election.
Farmers and ranchers are also anxious for Congress to act on estate and capital gains taxes. On Jan.1, the estate tax exemption is slated to drop from the current $5 million to $1 million per person and the top tax rate will climb from the 35 percent in place now to 55 percent. The spousal transfer for the exemption will also disappear.
As part of an ongoing AFBF campaign, farmers and ranchers are e-mailing and calling their lawmakers to let them know how important estate tax reform is to keep family operations going and ease the transition following the death of a family member. Until estate taxes are permanently eliminated, farmers want Congress to keep or improve the current exemption, indexed for inflation, maintain spousal transfer and continue the top tax rate.
“If Congress doesn’t act on estate taxes, many more surviving farm family members could be faced with making critical decisions to sell land, buildings or equipment to generate enough money to pay the tax,” said Pat Wolff, AFBF tax specialist.
As with estate taxes, farmers are disproportionately affected by capital gains taxes. And, as with estate taxes, without congressional action, the capital gains tax rate will go up on Jan. 1, 2013.
With the new year, the top long-term capital gains tax rate will rise from the current 15 percent to 20 percent, and the dividends tax rate will more than double to 39.6 percent. Nationwide, 40 percent of all agricultural producers report some capital gains, nearly double the share for all taxpayers. And the average amount of capital gains reported by farmers is about 50 percent higher than the average capital gains reported by other taxpayers, according to AFBF.