February 2013
National Potato Council: Federal tax policy threatens family farms By John Keeling

Last December’s fiscal cliff” debate in Washington, D.C., shed a national spotlight on some of the unique challenges that farmers face in securing their investments in land and production assets for their families.
Although individuals and family-run corporations own approximately 98 percent of America’s two million farms and ranches, they are increasingly being lumped together with the much maligned big business sector by those who are searching for more funding to run the federal government. However, the inclusion of inheritance and capital gains taxes in the debate brought to light the fact that our federal tax policy is often at odds with the country’s stated goal of retaining multi-generational family farms within the family.
For example, in order to pass down a family farm after the death of the owner, families must meticulously plan for the estate tax and the financial burden it creates. Under the tax rates put in place during the George W. Bush administration, estate gift taxes were set at a $5 million exemption and a top tax rate of 35 percent. Even at that rate, farmers wishing to transfer their property and business interests to their descendants had to plan ahead so the next generation could avoid being swept under by inheritance taxes.
Federal capital gains taxes also acutely impact farmers more so than the general population. Land and buildings typically account for 76 percent of a farmer’s assets, and, if a family farm is fortunate, those assets have stayed in the family for decades. Any increase in capital gains tax rates severely penalizes farmers when they dispose of these assets held for longer than a year.
During the fiscal cliff debate, Congress heard from the agriculture community who called for the Bush capital gains and estate tax rates to remain in place. During this year’s Potato D.C. Fly-In, held Feb. 25-28 in downtown Washington, D.C., we will encourage Congress to continue to keep farmers and ranchers in mind when considering tax policy that impacts their long-term viability.
For those unfamiliar with the event, the Potato D.C. Fly-In is an annual gathering of potato growers and industry leaders who come from across the country to educate policy makers on the issues that could impact their farms and operations for generations to come.
At the meeting, which is open to anyone interested in making a difference for the industry, attendees learn how the laws and regulations being considered by Congress and the administration could affect their farms and businesses. They then unite with their fellow growers and industry partners to deliver unified messages directly to congressional lawmakers and federal regulators.
In addition to tax reform, the 2013 Fly-In will address issues such as defending farms from the promulgation of even more burdensome environmental regulations, and reforming the broken guest worker program.
After last November’s election, USDA Secretary Vilsack told the nation that rural America is becoming less relevant to the politics of this country. The Potato D.C. Fly-In is our chance to show Washington, D.C. that agriculture is still a force with which to be reckoned.
Visit www.NationalPotatoCouncil.org for more information or contact your state organizations about ways to get involved in advocating for federal farm legislation. Together, we can make a difference.

75 Applewood Dr. Ste. A
P.O. Box 128
Sparta, MI 49345
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