Tom Stenzel, United Fresh Produce Association I think just about everyone in America was tired of the news stories about the so-called “fiscal cliff,” so when Congress passed its big tax reform measure on Jan. 1, there were multiple reasons to celebrate the new year.
Congress passed meaningful estate tax reform; it passed an extension, of sorts, of the 2008 farm bill; and it set the stage for crafting a 2013 farm bill that can build on the framework we achieved in the 2012 farm bill package.
The changes to the estate tax will benefit thousands of family businesses in the produce industry.
There’s a reason it’s known as the Death Tax. It would be hard to find other laws that are as punitive to America’s small, family-owned businesses as this one.
As part of the tax legislation, lawmakers set the individual estate tax exemption at $5 million ($10 million for spouses), adjusted for inflation, with a tax rate of 40% over that. Unfortunately, that’s an increase from the 35% rate, but it’s also a substantial increase in the individual exemption.
Without the deal, the estate tax rate would have rolled back to the Clinton-era rate of 55% with only a $1 million exemption.
With so many family-based companies in the produce industry, there’s no such thing as a good estate tax, but at least the new law gives families some certainty about their estate planning by setting the rate and exemption permanently (as permanent as anything is in Washington, D.C.).
On the other hand, it’s disappointing that Congress kicked the can down the road on the farm bill. Lawmakers essentially passed an extension of the 2008 farm bill that expires Sept. 30.
An extension of the current farm bill is better than no bill at all, but it’s a setback nonetheless. That’s because United Fresh, working with the many other produce industry leaders in the Specialty Crop Farm Bill Alliance, made real progress with the 2012 farm bill.
The measure advanced many provisions in support of the produce industry, including research, marketing and nutrition.
Over the summer, the 2012 farm bill garnered bipartisan support on Capitol Hill. The Senate Agriculture Committee passed it quickly and helped get passage by the full Senate.
The House Agriculture Committee followed up with passage of its companion bill shortly afterward. But then the legislation stalled, never getting a vote in the full House of Representatives.
While most of the produce industry’s most important programs are preserved in the farm bill extension, a few programs lost their mandatory funding.