Congress late yesterday approved an $858 billion bipartisan tax package, including an increase in estate tax exemptions that marked a “victory” for American farmers and ranchers, industry groups said.
The deal, which extends Bush-era tax cuts until 2012, averts estate tax hikes that would have taken effect Jan. 1 and had severe financial consequences for agricultural families, according to the National Cattlemen’s Beef Association.
“Although we believe permanent repeal of this tax is the best answer, two-year relief for family owned operations is better than the 55 percent tax that would leave many farmers and ranchers in a financial ruin,” said Colin Woodall, vice president of government affairs for the Washington, D.C.-based NCBA, said in a statement.
If the estate tax had been allowed to revert back to the pre-2001 level of 55 percent on property valued at $1 million, many farmers and ranchers would have been forced to sell, further depopulating rural America, Steve Foglesong, NCBA’s president, said in the same statement.
The bill, known as the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, passed by a 277-148 House vote after gaining Senate approval Dec. 15. It includes an extension of unemployment benefits aimed at boosting an economy still struggling with unemployment at nearly 10 percent. President Obama is expected to sign the bill into law.
Other agriculture groups also welcomed the deal, which will lower capital gains and income taxes and tax incentives for renewable fuels.
“Securing meaningful estate tax reform for farm and ranch families has been a top priority” for the American Farm Bureau Federation, Bob Stallman, the group’s president, said in a statement today. “It offers considerable relief that will help farmers, ranchers and rural communities in these difficult economic times.”
The bill raises the threshold for the estate tax to $5 million from $3.5 million in 2009 and reduces the estate tax rate to 35 percent from 45 percent. House Democrats unsuccessfully attempted to raise the tax. Couples will be allowed to pass up to $10 million from an estate to their heirs tax-free, with assets above $10 million to be taxed at 35 percent.
That will also ease the tax burden for fruit and vegetable growers, which often have the majority of assets tied up in farmlands and facilities that have been family owned for years, said Tom Stenzel, chief executive of the United Fresh Produce Association.
“Our industry is built on the strength of multi-generational family businesses,” Stenzel said in a statement today. “The estate tax provisions in this bill will help many of our members who want to pass along family businesses and farms to their children, without having to sell their assets just to pay a death tax.”
Estate tax reform is “especially critical for these family businesses to survive,” Stenzel said.
The estate tax, also referred to as a “death” tax, is imposed on property and other taxable assets of a deceased person.
Agriculture groups have for years fought to have the tax reduced or eliminated, arguing it unfairly burdens farmers, who rely on numerous capital assets such as land and equipment. Critics say the tax often forces surviving family members to send land and buildings just to keep the operation going.