Congress gave its final approval on Tuesday to a bill which, for now, takes America off the edge of the “fiscal cliff” for the time being, but still leaves the country hovering near the edge and agriculture producers without a full farm bill.
By a vote of 257-167 vote in the House, passage of the bill came after a day of drama on Capitol Hill. As it stands, the bill permanently extends the 2001 and 2003 tax rates for individuals with income below $400,000 and below $450,000 per couple, with an increase in tax rates for incomes over these thresholds from 35 to 39.6 percent. The capital gains tax rate for higher incomes will rise from 15 to 20 percent.
On the estate tax, a top priority for the National Cattlemen’s Beef Association (NCBA), the exemption level remains at $5 million ($10 million per couple). Unfortunately, the top tax rate on the value of the estate over the exemption level increases from 35 to 40 percent. Fortunately, estate tax exemptions remain tied to inflation, maintain the step up in basis and allow for spousal transfers.
“We pushed to keep the estate tax exactly the way it was. We were able to keep the exemption levels tied to inflation so they will increase over time,” said NCBA Vice President of Government Affairs Colin Woodall. “It’s not perfect, but it is now permanent and we can focus on other ways to protect the estates of cattlemen and women.”
The package extends the 2008 Farm Bill until Sept. 30, 2013, and authorizes limited disaster assistance for fiscal years 2012 and 2013, with $80 million for livestock indemnity payments, $400 million for the livestock forage disaster program and $50 million for emergency assistance for livestock. Funding for these programs is subject to receiving the money from appropriations committees.