ASA Pushes Year-End Tax Issues

By CnAgri Print

The American Soybean Association joined other farm and commodity groups at a November meeting to discuss expiring tax provisions that impact farmers and ranchers. The same coalition of 34 farm groups wrote to Congress earlier this spring expressing support for reforming current estate tax laws before the end of this year. Current law holds that the estate tax exemption will shrink to $1 million per person rather than the current $5 million beginning Jan. 1, with the maximum tax rate increasing to 55 percent from the current 35 percent, adjustments that will devastate the family farms and small businesses that comprise the soybean industry.

Given the current prices of land, livestock and equipment, the average farms that provide the primary source of income for the families who operate them would reach the adjusted $1 million exemption level quickly. Because agricultural operations are land-based and capital intensive, in many cases, parts of the business would need to be split off and sold to pay taxes after the death of the primary owner.

ASA supports permanently keeping the current exemption at $5 million per person and retaining the top rate of 35 percent. ASA believes it is also imperative that the permanent estate tax law index the exemption to inflation, provide for spousal transfers, and include the stepped-up basis.

Legislation has been introduced in both the House and Senate that would permanently repeal the estate tax, but neither chamber has acted on it. Estate taxes, as well as other expired and expiring tax provisions including the biodiesel tax credit, capital gains taxes, and deductions for health insurance for the self-employed, are expected to be among the many tax issues Congress may consider in the lame-duck session.

"Many proponents of the estate tax adjustments forget that soybean farmers and our counterparts in other areas of agriculture are small, family businesses first and foremost," said ASA President Steve Wellman. "The revenue we bring in, as well as any profit we can make, is put right back into our operations in the form of equipment, infrastructure and acreage. We are a land-based, capital-intensive industry, and when estate taxes come due, we are forced many times to sell off that equipment, infrastructure or acreage to fulfill our obligations. The unique nature of agriculture must be taken into account as Congress addresses the estate tax."

To reinforce the message, ASA again joined with its fellow farm groups in pressing the House and Senate as members of both chambers returned to Washington following the elections to provide meaningful estate tax relief for farmers and ranchers in the lame duck session before the 112th Congress adjourns at the end of the year. In its recent letter, ASA and its colleagues reminded House and Senate members that the risk to farm families of even a short period with such a low exemption is heightened because many farm operators are older than the average American and because of the inherent risks of owning and operating a farm.