What to Watch in Washington

November 17, 2010 06:01 AM
 

The world of Washington has a nasty habit of affecting the business of agriculture on a host of fronts, from new regulations to changes in current law. To prepare for what lies ahead, here are some issues to watch.

Income taxes: Congress exited Washington to hit the campaign trail without addressing the fact that the 2001 and 2003 tax cuts are set to expire at the end of 2010. This issue is on a split track: Most observers expect that a one-year extension will be approved by lame-duck lawmakers, but the Obama administration supports extending the cuts only for taxpayers making less than $250,000 per year, while Republicans are pushing for an across-the-board extension for all taxpayers.

Estate taxes: The estate tax disappeared for 2010, but it is poised to roar back to life in 2011 at 2001 levels: a 55% tax rate and an exemption of $1 million per person. However, what most observers expect is a return to the 2009 levels: a 45% tax rate and an exemption of $3.5 million per person ($7 million per couple). There is growing support for gradually lowering the tax rate (to 35%) and increasing the exemption level (to $5 million per person). Lame-duck lawmakers are expected to act before the end of 2010.

Biofuels incentives: The biodiesel tax credit lapsed at the end of 2009 and lawmakers spent most of 2010 trying to get it restarted. Now the Volumetric Ethanol Excise Tax Credit (VEETC) and the ethanol import duty are set to expire at the end of 2010. Lame-duck lawmakers will try to extend the ethanol provisions and try again to restart the biodiesel tax credit. They have a strong argument: The lapse of the biodiesel tax credit meant the loss of 12,000 jobs. Concerns about cost could limit an extension of the VEETC and import duty to just one year. Removing the import duty, as some advocate, would cost the government revenue, and that’s not an easy thing to vote for.

Next farm bill: The results of the midterm election could have as much sway as the budget for the next farm bill. Lawmakers are already pushing to get the bill wrapped up in 2011, and the budget is the main reason. While most growers are happy with the 2008 farm bill, there are programs that some want to make changes to, notably the Average Crop Revenue Election (ACRE) program and the Supple-mental Revenue Assistance Payments (SURE) program. The SURE
program ends prior to the end of the 2008 farm bill, which means money will have to be found to keep it operational in the next version of the bill.

Deficit reduction: The bipartisan debt commission is to report its recommendations by Dec. 1—that is, if 14 of the 18 members of the panel can agree on which areas to cut in order to reduce the nation’s red ink. Lawmakers expect this effort to be a major factor in the budget deficit cuts that lie ahead.


Top Producer, Mid-November 2010

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