As the Jan. 1 deadline draws near for the 'fiscal cliff,' an urgent call continues to come from legislators and farm groups for congressional support behind limiting tax rate increases and ensuring protection for farmers, ranchers and small businesses.
The looming increases represent a handful of the many changes that are to come if a consensus is not reached among lawmakers and the White House.
If the tax hikes take effect, capital gains taxes and the production tax credit will be changed or eliminated and estate tax rates will rise to 55% with a $1 million exemption – much different from the current 35% with a $5 million exemption.
"With anything above [$1 million] taxed at a staggering 55%, a $1 million threshold may seem like a lot but rising farmland prices are pushing the value of ag operations much higher," said Sen. Mike Johanns, R-Neb., in a statement last week.
"Farmers and ranchers, many of whom have had land in their families for generations, should not be forced to pay the government more than half the value of their estate," Johanns added.
Florida Rep. Tom Rooney agreed, also action on the estate tax, which he says will mean the end of many family farms.
"We won't just lose a way of life in rural America – we'll lose jobs and we'll put our country's ability to produce a safe, affordable food supply at risk," Rooney said in a statement.
Also of concern is the capital gains tax, which would increase from 15% to 20% in January.
Johanns stressed that farming and ranching is capital-intensive, with farmers selling and buying assets frequently.
"When our producers sell assets such as breeding stock, buildings and farm land, they pay capital gains taxes. This increase would hit them especially hard," Johanns noted.
National Farmers Union President Roger Johnson Tuesday urged a fiscal cliff agreement for the benefit of a 2012 Farm Bill and production tax credit.
Johnson said besides increasing taxes to raise revenue, avoiding the fiscal cliff can be completed through reducing spending by including a five-year farm bill.
"Both the House and Senate agriculture committees, along with the full Senate, have passed bipartisan versions of the farm bill that will save between $23 billion and $35 billion. A compromise version of this five-year farm bill represents a smart way to cut spending that Republicans and Democrats can agree to," Johnson said.
He also urged action on the expiration of the production tax credit, which provides an income tax credit for the production of electricity from renewable sources.
"The benefits of the PTC to rural development are enormous and will give farmers and ranchers the chance to diversify their operations by receiving lease payments, while saving 37,000 jobs and continuing to diversify our energy supply, thus increasing energy security," Johnson said.