Cattle industry faces the consequences of status quo

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By now cattlemen and cattlewomen have all heard the news that the results of the election have resulted in a prolonging of the status quo. What that means in real terms to their operation is less clear. National Cattlemen's Beef Association (NCBA) Vice President of Government Affairs Colin Woodall sums it up by saying he expects the "shackles to come off," in terms of a number of regulations which have been pending on the outcome of the election.

"We just saw the denial of the Renewable Fuels Standard waiver by the Environmental Protection Agency last week and we expect that's an indicator of things to come," Woodall explained.

Woodall expects cattle producers will see guidance on the Clean Water Act and the dust rule very soon along with other potentially burdensome regulations. Woodall also said he expects that other important priorities for cattlemen and women will be much more difficult to achieve, particularly after the "lame duck" session of Congress is complete.

"With the make-up of the House and Senate staying essentially the same, we expect the gridlock we've seen over the past two years to continue," said Woodall. "What that means is we won't have an opportunity to address the big ticket items such as the estate tax or Endangered Species Act reform for the next several years. Those are just completely off the table."

However, he emphasized that NCBA will continue to make the estate tax a priority, with the focus shifting from a full repeal to maintaining current exemption levels. The so-called Bush-era tax cuts expire at the end of the year and with them the $5 million per individual, $10 million per couple estate tax exemption levels currently in place. The top tax rate of 35 percent will also lapse. In its place will be a tax that could wipe out many farms and ranches. If current estate tax rates are not extended before the end of the year, farmers and ranchers will be taxed on assets over $1 million, and the top tax rate will revert back to a staggering 55 percent.

"Our hope is for at least a four-year extension of what we have right now. We know that for the next four years there is no way we can have a productive discussion on comprehensive estate tax reform," said Woodall. "We need to maintain what we have for the next four years to provide a little certainty. It's very hard to make any plans on a two-year basis."

Although the estate tax remains the top priority for NCBA, Woodall notes he and the Washington, D.C., staff will continue fighting on behalf of cattlemen and women on a wide spectrum of issues. However, he points out that progress will be difficult. Woodall called on cattlemen and cattlewomen to engage with their elected officials at every opportunity in an effort to help make in-roads.

"The biggest thing we need is for cattlemen and women to start introducing themselves to the staff in their congressional district offices. We know not everyone can make it to Washington, D.C., but they can make it to those district offices where there are generally a few staff members," said Woodall. "We need producers to introduce themselves to those staff members. More importantly we need them to invite those staffers out to their operations and let them see what they do. By doing that, when staffers interact with their counterparts in Washington, D.C, they can better explain what ranchers do on a daily basis. This is especially important if you have a new member of the House or Senate representing you."

Woodall said that interaction will make it easier for cattlemen and cattlewomen to more effectively express their opinions on issues that affect their operations, particularly now that the industry faces another two years of status quo.

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November, 27, 2012 at 06:42 PM

How many farmers and ranchers have actual net incomes that come anywhere near the top tax rates? How many farmers and ranchers have estates that will actually reach the $1 million mark. Report some real numbers, it can't be that hard to find out how many will actually be effected. Otherwise you're just making noise.

November, 28, 2012 at 08:27 AM

Rick I don't know where you live but in central Montana a ranch the size of mine is average. It has been in my family since the 1800's. My mother is in a nursing home and my father pasted away. After the first of the year I would have to pay well over a two million in estate taxes to keep the place. If my income meets expenses every year I am lucky. And like I said my ranch is average, many family ranches around here are larger than mine. We can't sell because the capital gains tax would take everything, we can't buy more land because the price is to high, and we can't run more cattle because we are at the max now. We live her because we like the life. But we don't make any money it we just survive. We could not afford to pay two million to keep the place my family has had for over a hundred years. Let's see how proud of that Obama bumper sticker you are in 2016.

Oklahoma  |  November, 28, 2012 at 10:03 AM

The top tax rate being referred to here (55%) is on estates, not income. I combine costs in excess of $300,000. Tractors can pass $100,000 each. To own enough land to make a living on, say 750 acres at $5000/acre, plus equipment and facilities could EASILY push past $4,000,000. Don't want to own equipment and contract the farming? Land is still over $3,500,000. In my part of the country, irrigated ground is $3500/ac but you'll need a minimum of about 1200 acres to even have a chance at making any money. Oh, and those pesky $80,000 sprinklers on each quarter add up too. That's all to work 7 days a week, 52 weeks out of the year and make maybe $35,000/year with about $5,150,000 in assets. Yeah, farmers and ranchers are really needing a more common sense approach to estate taxes and estate tax reform help.

November, 28, 2012 at 03:08 PM

Some irrigated farm ground down the road from our farm/ranch sold for $11,000/acre and some pasture ground this fall went for well $2400/acre when we purchased our farm we paid a little over $2000/acre (pasture and irrigated ground combination) not too many years ago. At those prices one would only have to own 90 acres of irrigated farm ground or 415 acres to be at the minimum to not have to pay the 55% estate tax. Either way you do the math that is a very, very small farm/ranch in our area of the country. I am really confident that the vast majority of family farms/ranches in the US will surpass that $1 million mark on the estate tax especially with the sky rocketing land values we have seen in the past couple of years. Even in areas of the country where the farm size is smaller than where I live as those area are the ones faces with more urban spawl to drive up land values.

SD  |  December, 03, 2012 at 07:40 PM

It is likely there will be much loud wailing when some farmer/rancher types learn the hard way just how oppressive the Death Taxes on their family business will be! Not to mention the fact that there are also nearly endless tax increases already on the books via that super secretive 'Obamacare' bill! Even in my area where it takes at least 25 acres per cow, some range land recently sold for $1500.00 per acre. Add the fact that one can expect a return on investment in agriculture of about 3%. Figure out what kind of an 'estate' it would take to have even a very modest income farming or ranching under that criteria! The fact that the cost of collection and compliance of the Death Tax is over 65%, and it seems extremely obscene, IMO. And it seems pretty popular with too many people who fall into the 'wealth envy' group so easily.

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