The American Farm Bureau Federation is urging Congress to maintain capital gains rates at the current 15% level and strongly backs legislation introduced that would eliminate the sunset of the current tax rates for capital gains and dividends. Companion bills were introduced Tuesday in the Senate by Senator Mike Crapo, R-Idaho, and in the House by Representative Peter Roskam, R-Ill.
According to AFBF President Bob Stallman, the legislation would provide greater tax certainty for America’s farmers and ranchers. Under current law, the top long-term capital gains tax rate will rise to 20% on January 1, 2013. The Crapo and Roskam bills would kill that increase.
Stallman explained that low capital gains tax rates increase the incentive for U.S. farmers and ranchers to invest in assets to grow their businesses and help them remain productive and profitable. Higher capital gains taxes make it difficult for many family farms, which make up 98% of total farms across the United States, to obtain land, buildings and animals they need to stay efficient.
“The impact of capital gains taxes on farming and ranching is significant because production agriculture requires large investments in land and buildings that are held for long periods of time,” Stallman said. “Because capital gains taxes are imposed when buildings and farmland are sold, it is more difficult for producers to shed unneeded assets to generate revenue to adapt and upgrade their operations. Capital gains taxes also threaten the transfer of land to the next generation of farmers and ranchers, putting the future of agriculture at risk.”
Also according to Stallman farmers and ranchers are disproportionally affected by capital gains taxes with more the 40% of agricultural producers nationwide reporting some capital gains, which is nearly double all other taxpayers.