The final-hour budget scramble in Washington, D.C. provided some good news for beef producers but also left questions unanswered, says Colin Woodall, NCBA’s vice president of government affairs.
The best news, he says in this week’s “Beltway Beef” audio report from NCBA, is the agreement locks in estate taxes with the exemption at $5 million for individuals and $10 million for couples. The exemption is indexed to inflation and will grow over time. The maximum tax rate rises from 35 percent to 40 percent. Woodall says the increase, while not preferred, is a good compromise as some Democrats wanted a $3.5 million exemption and a maximum tax rate of 45 percent.
Without any agreement, the estate tax exemption would have reverted to $1 million with a maximum rate of 55 percent.
Now that the tax is permanent, farmers and ranchers can plan their estates with more certainty and NCBA can focus on working toward additional protections rather than continuously playing defense, Woodall says.
Unfortunately, Congress failed to pass a new farm bill in 2012, instead opting for a one-year extension of the 2008 bill. The extension begins on the date the previous bill expired, meaning it will run out on September 13, 2013.
Woodall says NCBA worked closely with the House and Senate agriculture committees in developing their respective versions of the farm bill, but he fears most of that work will fall by the wayside as the new Congress essentially starts from scratch. New faces in both houses of Congress, including a shift from Senator Pat Roberts (R-Kansas) as ranking member on the Senate ag committee to Senator Thad Cochran (R-Mississippi), make it unlikely either chamber will adopt the versions of the bill passed by the previous House and Senate agricultural committees.
Farmers and ranchers, Woodall stresses, need a five-year bill in order to plan ahead and manage their risk effectively.