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.