Senate Proposes Some Farm Tax Savings In Millionaire Surtax Bill
Oct 10, 2011
The American Jobs Act introduced in the Senate last week (commonly known as the Millionaire Surtax bill) contains some provisions that will help out our farmers. These are:
- Extend the 100% bonus depreciation until Dec. 31, 2012. It is currently in place for all of 2011 and at 50% for 2012. This would make it 100% in 2012.
- Cut the employer portion of the Social Security tax from 6.2% to 3.1% on the first $5 million of wages paid. The maximum savings would be $155,000. This tax cut would also apply to self-employed farmers on their personal earnings.
- Create a new credit to completely offset the employer Social Security tax on the wages in excess of the wages paid in the previous year. For example, if a farmer paid $500,000 of wages in 2011 and increased these wages to $750,000, the 6.2% employer Social Security tax on the $250,000 excess would have a credit of $15,500 to offset the tax. This would apply on up to $50 million of excess wages. (I think this would cover most of the farmers in the U.S.)
- Cut Social Security taxes in half in 2012 for all workers from 6.2% to 3.1%. Currently for 2011, it is at 4.2%.
- Provide incentive work credits to hire unemployed veterans. These credits could be as high as $9,600.
In order to pay for these tax cuts, the act imposes a surtax of 5.6% on taxpayers earning more than $1 million beginning in 2013. (It is interesting how these tax increases always seem to apply right after a presidential election.) This is the so-called Millionaire Surtax provision.
All in all, there do appear to be several tax goodies in the act for our farmers and almost everybody else who works for a living in the U.S. If it passes, we will keep you updated on any changes.