FARM BILL EXTENSION INCLUDED IN FISCAL CLIFF AGREEMENT
WASHINGTON, D.C. — Farmers will continue to operate under the 2008 farm bill until Sept. 30, when the extension of current farm policy legislation will expire. A last-minute plan to continue the 2008 farm bill was approved Jan. 1 as part of the vote by Congress to avoid the so-called “fiscal cliff.” However, the package also included changes to estate tax laws that should help more farm families keep their land.
|Farmers can plan for the short-term, knowing Congress passed a nine-month extension of the 2008 farm bill. The "fiscal cliff" agreement also addresses spending cuts and tax increases, including the estate tax. |
Congress failed to enact a new five-year farm bill that was discussed for more than a year. Tuesday’s vote also permanently set the threshold for exemption rates of estate taxes at $5 million.
Without extending the farm bill, farm policy would have reverted to the “permanent law” written in the 1930s and 1940s.
“While a last minute extension of farm policy may have been the only option at this time, it should never have come down to this,” said Mitt Walker, Federation director
of National Legislative Programs. “The full Senate passed a bill, and the House Committee on Agriculture approved its version of a bill, which was never considered by the full House. Both proposed a five-year plan to give farmers some certainty from one crop year to the next. Unfortunately, farmers will have to wait another
year for a long-term farm bill.”
The majority of the farm bill spending, nearly 80 percent, goes to government-funded nutrition programs. With the extension approved, farm program payments to crop farmers are the same this year, and current policies for milk pricing remain in place. Funds have run out for a number of programs included in the bill such as disaster assistance and biofuel development.
The extended farm bill was included in a collaboration of bills between Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky.
Dairymen across the country expressed disappointment because the bill dropped a revised dairy plan, which had been agreed to by House Agriculture Committee Chairman Frank Lucas, R-Okla., and Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., and was included in the Senate and House versions of the farm bill.
“Dairy producers worked for a number of years to design a plan to address their unique needs by stabilizing milk prices and supplies and to help them deal with rising input costs,” Walker said. “The final extension package did not contain this new program. The bill also neglected to provide mandatory funding for a number of livestock and tree disaster programs.”
Walker said changes to estate tax laws are a positive development for farmers. The exemption for estate taxes remains at $5 million, but the tax rate for estates exceeding that amount will increase from 35 percent to 40 percent. Without action, the exemption level would have fallen to $1 million and the tax rate would have increased to 55 percent.
“Even though the tax rate does rise slightly, maintaining the exemption level at $5 million will keep more farmers from facing this terribly unjust tax,” Walker said. “The Alabama Farmers Federation continues to support the total elimination of estate taxes, but this could be viewed as win in the bill.”
In the agreement, automatic-spending cuts put in place earlier as part of raising the debt ceiling, also known as sequestration, were delayed for two months. The “fiscal cliff” bill maintains tax rates for most Americans, only increasing taxes for individuals making more than $400,000 annually or for couples making more than $450,000 a year. Capital gains taxes on that same income bracket will increase from 15 percent to 20 percent. Payroll tax cuts will expire, while unemployment benefits will be extended for nearly 2 million Americans.
The bill passed the Senate with an 89-to-8 vote early New Year’s Day and passed the House in a 257- 167 vote that evening. Sen. Richard Shelby, R-Ala., voted against the measure, and Sen. Jeff Sessions, R-Ala., voted for it. U.S. Rep. Terri Sewell, D-Ala., was the only “yes” vote from Alabama’s delegation in the House. President Obama is expected to sign the bill into law.