Tax Time Looms Across the Land
American Farm Bureau
President, American Farm Bureau
As America's farmers and ranchers dig in to determine their amount of Uncle Sam's due, it is easy to recall the adage that only two things in life are guaranteed - death and taxes. None of us know when that first certainty will come to call, but all Americans are painfully aware of when the second one will. Yes, it's that time of year again.
Each year as I prepare my farm taxes, I am always struck by the tremendous amount of time and energy this task consumes. Someone once suggested that the effort to fill out income tax forms is more difficult than earning the reported income in the first place, but I doubt that person was a farmer or rancher.
Tax issues are high on Farm Bureau's priority list. As our mission states, one of our main goals is to "improve the financial well-being" of farmers and ranchers. We take this task seriously. When it comes to this pocketbook issue, it seems there is always room for progress.
One of the most egregious taxes we battle is the estate tax - or death tax. Even though none of us knows when death will find us, when it does, the death tax is there, ready to plague our legacy and punish our loved ones.
Farmers work hard their entire lives, paying taxes along the way. Most of us hope our years of labor will yield something to help sustain our survivors. Unfortunately, regardless of the attorneys, consultants and accountants we employ to help protect us, the death tax remains a thief that can pilfer large portions of any financial or farming heritage we leave behind.
Remember, these are assets on which farmers already have paid taxes. The death tax then slinks in to re-tax those same assets. This can result in heirs having to sell at least some of those assets to pay taxes and a family farm being broken up to pay death tax obligations.
The good news is that in 2001 Congress passed legislation that phases out death taxes by 2010. Unfortunately, it is currently scheduled to come back to life in 2011. Farm Bureau will vigorously support bills already introduced in the 108th Congress to permanently kill the death tax.
Capital gains taxes are another challenge for America's farm and ranch families. Because capital gains taxes are imposed when buildings, breeding livestock and farmland are sold, producers are discouraged from selling unneeded assets and putting them to more productive uses.
Capital gains taxes threaten the transfer of farmland because sellers price their land and buildings in order to recover the cost of the taxes. This increases the price of farmland needed by beginning or younger producers and increases the likelihood that farmland will be sold for other uses. We will work to reduce capital gains taxes during the 108th Congress.
We also support a new and innovative risk management tool, called Farm and Ranch Risk Management Accounts (FARRM). This provides tax deferment to help farmers save for years when prices are low or crops are poor. This type of self-insurance program will help producers weather the ups and downs of the farm economy.
In addition, Farm Bureau continues to watch the CARE bill tax package. This would provide farmers and ranchers enhanced tax deductions for charitable and humanitarian donations of food and commodities. Those of us who donate farm products deserve the same tax break that corporations and others already enjoy.
Thanks to President Bush's leadership we all may soon enjoy much-needed tax relief. His common sense tax reform package incorporates several items that benefit all taxpayers. Farm Bureau, of course, specifically supports those items that will benefit farm and ranch families, including expanding the small business expensing limit. We applaud the administration's efforts in making tax reform a national priority.
The list of tax issues that are ripe for reform is long, but another of life's certainties is that Farm Bureau is in this fight for the long haul. Our hope is that someday the "guarantee" of taxes in our lives won't feel so much like a death sentence.