Washington--Congress needs to change the tax code so that farmers and landowners are better able to sell their land to beginning farmers and ranchers, Agriculture Secretary Tom Vilsack said last week at USDA’s Agricultural Outlook Forum.
“There’s really no reason for someone with land that appreciates in value to consider the sale of that land to anybody until after they have passed away, under our current system,” Vilsack said. “That creates a land lock we need to address. And there are opportunities, should Congress so desire, to take a look at both estate and income taxes to free up opportunities for transfer.”
A handful of Bush administration tax cuts, already extended twice by Congress, will expire at the end of this year. Estate taxes will rise to as much as 55 percent, from the current 35 percent, and the individual exemption will plunge to $1 million, from the current $5 million. Capital gains taxes will go from zero to 10 percent for those in the lowest tax brackets (15 percent or lower) and from 15 percent to 20 percent (or 18 percent for assets held longer than five years) for those in higher income brackets. The American Farm Bureau Federation is urging Congress to extend the current estate tax and capital gains tax levels.
Vilsack, himself a farm owner, said he sympathizes with farmers’ and ranchers’ concerns about the estate tax, “because if something doesn’t happen at the end of the year, the estate tax [exemption] goes down to a point where with land values increasing it doesn’t provide the protection that we have always wanted to provide for farmers and small business owners to be able to transfer that opportunity without having to sell the farm itself just to pay the tax.”