Congress focused much of its attention this week on a compromise tax package negotiated by President Barack Obama and Congressional leaders to extend existing unemployment benefits; maintain Bush-era tax rates; modify the estate tax to levels supported by NAWG and many other agriculture organizations; and extend biofuels tax incentives through 2011.
The compromise was announced Monday to some dissension from Republicans who say its price tag, an estimated $858 billion over ten years, is too high, and from Democrats who say the tax breaks included are too generous for the very wealthy.
Importantly for agriculture, the agreement includes provisions to modify the estate tax in 2011 and 2012 to include a $5 million exemption and a maximum tax rate of 35 percent. These details were included in a prior proposal offered by Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.) and Sen. Jon Kyl (R-Ariz.) which attracted support from NAWG and many other groups representing agricultural producers.
The agreement also addresses biofuels tax credits set to expire at the end of this year, which NAWG and other agricultural groups have argued are essential to incentivize the continued growth of first- and second-generation biofuels.
The agreement would extend through 2011 the current ethanol tax credit, known officially as the Volumetric Ethanol Excise Tax Credit (or VEETC), at the current level of 45 cents per gallon and the current tariff on imported ethanol at the current level of 54 cents.
The agreement would also reinstate the biodiesel tax credit, which expired at the end of last year, for 2010 and extend it through 2011.
Importantly for the compromise, other major provisions extend expiring tax cuts for all taxpayers for two years – a key Republican priority – and extend unemployment benefits for 13 months – a key Democratic priority.
Senate Majority Leader Harry Reid (D-Nev.) has introduced a bill to enact the compromise, starting debate Friday with votes scheduled for Monday. The bill has been criticized by some Senators, but it is expected to ultimately gain enough votes to overcome procedural hurdles on the way to passage.
Passage in the House is less certain, with House Democrats approving on Thursday a non-binding resolution opposing the compromise as announced. It is unclear what roadblocks this opposition will ultimately create.
NAWG will continue to follow the package’s progress and update state associations as appropriate. In the meantime, NAWG urges all growers and state staff to contact their home-state Members in both the House and Senate to express strong support for the estate tax provisions as announced.