Tom Stenzel, United Fresh Produce AssociationI 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.
In particular, the Specialty Crop Research Initiative (SCRI), which provides resources to many critical research projects, was granted only discretionary funding, as compared to as much as $50 million in mandatory annual spending we had won in the 2012 farm bill language.
Because the SCRI funding in the extension bill is “discretionary,” Congress must still appropriate the money for the research programs.
United Fresh is already working in concert with our partners in the Specialty Crop Farm Bill Alliance to address the most immediate concerns about the farm bill extension, as well as working with the new Congress for passage of a 2013 farm bill.
We’re working to sustain bipartisan support for the many provisions that can contribute to a thriving produce industry and the health of consumers across the U.S.
The next few weeks are critical because Congress will likely hammer out sweeping government spending cuts. Like never before, lawmakers will be looking for ways to shave budgets. Now is the time to support our produce industry on Capitol Hill.
Get engaged and voice your support for our industry with your members of Congress.
The issues for 2013 are already lining up — whether it’s recrafting a new farm bill, finally putting in place real immigration reform and a solid agricultural guest worker program, or helping shape the new food safety rules coming from the Food and Drug Administration.
By standing together and speaking out, let’s work to avert any fiscal cliffs for the produce industry.
Tom Stenzel is president and chief executive officer of the Washington, D.C.-based United Fresh Produce Association.
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