“This so-called fiscal cliff could be devastating to local family farms, many of which have been in business for generations,” said Pat Calhoun, president of the Goliad County Farm Bureau. “This could be the straw that breaks not just agriculture, but other small businesses across the country, as well.”
Congress has been tasked with addressing the intersection of federal spending cuts with significant tax increases. For example, if swift action is not taken before Jan. 1, the estate tax exemption will decrease from $5 million to $1 million and the top rate will increase from 35 percent to 55 percent.
“On a typical farm, it is very easy to reach that $1 million level when you factor the value of land, equipment and other essential assets,” Calhoun said. “So, not only would the top rate kick in sooner, but then the farmer will be required to pay 20 percent more on the remaining amount. That’s enough to break nearly any family farm.”
The New Year also brings a potential increase in the capital gains tax from 15 percent to 20 percent.
“Without tax reform, farmers will be squeezed from all angles, making it more difficult to continue their business operations and grow the food and fiber that America needs,” Calhoun said. “We hope Congress gets the message and works together to quickly resolve this dire situation.”