By Mike Barnett

As Congress continues to spin in the ruts of indecision and partisan politics, agriculture is left high center as tax rates high on the list of concerns as farmers and ranchers make plans for next year.

The administration has scheduled meetings with leaders of both parties this week to consider the direction of tax policy.

Especially important to farmers and ranchers is the fate of the estate tax, which is zero until Dec. 31 as Congress let the provision expire. However, if this important measure is left unattended, the estate tax will roar back next year with a $1 million exemption and a killing 55 percent tax rate.

Of immediate concern, however, are a number of other tax provisions that expired at the end of 2009 or are set to expire at the end of December 2010. These are the Bush tax cuts passed in 2001 and 2003.

Interparty squabbling, intraparty disagreements and partisan politics have all played a part in the tax malaise. It’s pretty easy to see why this country is in an economic mess when we have politicians think cooperation and compromise are dirty words.

While Congress and the administration fiddle around, farmers burn because there’s no clear direction on tax policy. A new year and a new planting season are approaching. Anticipating tax liabilities is a big part of the planning process.

Farmers and ranchers probably did as well this year—barring floods and dry weather and plant diseases like aflatoxin—as they have in years. There’s money sitting on the sidelines and a pent up demand for big iron to put in the fields. Many would like to expand their operations. Decisions are being made on seed and fertilizer for the spring.

The uncertainty of tax policy has many keeping their hands in their pockets. A rise in the capital gains tax rate is under discussion, as well as higher income tax rates and self-employment tax and a number of other taxes that directly affect agriculture producers. Each dollar set aside to pay potential tax liabilities is one less dollar that is available to reinvest in a struggling rural economy. A capricious tax situation—mired in the muck of Washington politics—makes planning nearly impossible.

Hopefully Congress and the administration will get out of the ruts, hit firm ground and get tax policy headed back in the right direction. That day of tax reckoning should come this week.

With the track record in D.C. so far, I reckon we could need something to pull us out of the mud. You might want to have a tractor on standby—just in case.

Visit the Texas Farm Bureau website at www.txfb.org.
Follow us on Twitter and Facebook for the latest updates on this topic and many more.

Mike Barnett

Director of Publications
Texas Farm Bureau
I’m a firm believer that farmers and ranchers will continue to meet the needs of a growing world population by employing equal measures of common sense, conservation and technology.
Follow Mike on Twitter and Facebook.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>