Congress late yesterday approved a major bipartisan deal to extend tax cuts, including an increase in estate tax exemptions that will provide relief for U.S. farmers and fruit and vegetable growers, industry groups says.
Estate tax reforms have been a priority for many years, according to a news release from the United Fresh Produce Association, Washington, D.C.
âOur industry is built on the strength of multi-generational family businesses,â Tom Stenzel, chief executive of United Fresh, said in the release. âThe estate tax provisions in this bill will help many of our members who want to pass along family businesses and farms to their children, without having to sell their assets just to pay a death tax.â
The deal raises the threshold for the estate tax to $5 million from $3.5 million in 2009 and reduces the estate tax rate to 35% from 45%. House Democrats unsuccessfully attempted to raise the tax. Couples are allowed to pass up to $10 million from an estate to their heirs tax-free, with assets above $10 million to be taxed at 35%.
That will ease the tax burden for produce companies, which often have the majority of assets tied up in farmlands and facilities that have been family-owned for years, Stenzel said.
Estate tax reform is âespecially critical for these family businesses to survive,â Stenzel said in the release. âWhile we welcome this important step in shaping a fair estate tax law, this much-needed reform is for only two years.â
âWe are resolute in our goal of permanent estate tax reform in order to provide certainty for our family-owned businesses to make sound business decisions,â he said in the release.
The $858 billion tax package, known as the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, passed by a 277-148 vote. It includes an extension of unemployment benefits aimed at boosting an economy still struggling with unemployment at nearly 10%. President Obama is expected to sign the bill into law.
Other agriculture and farm groups also welcomed the deal, which will also lower capital gains and income taxes and tax incentives for renewable fuels.
âSecuring meaningful estate tax reform for farm and ranch families has been a top priority for Farm Bureau,â Bob Stallman, President of the American Farm Bureau Federation, said in a news release today. âIt offers considerable relief that will help farmers, ranchers and rural communities in these difficult economic times.â
The estate tax, also referred to as a âdeathâ tax, is imposed on property and other taxable assets of a deceased person.
Agriculture groups have for years fought to have the tax reduced or eliminated, arguing it unfairly burdens farmers, who rely on numerous capital assets such as land and equipment. Critics say the tax often forces surviving family members to send land and buildings just to keep the operation going.