Texas and Southwestern Cattle Raisers discussed tax issues, especially estate taxes, with members of Congress last week in Washington.
Members of the Texas and Southwestern Cattle Raisers Association (TSCRA) met with members of Congress and regulatory officials in Washington, D.C. last week to discuss issues critical to the cattle industry. The meetings were part of a three-day legislative conference hosted by the National Cattlemen's Beef Association (NCBA).
"There are multiple proposals in Washington that could drastically change the face of the cattle industry," said Dave Scott, rancher and TSCRA president. "It is extremely important to bring our concerns and support directly to our elected officials."
One issue of concern to family ranches is taxation. If Congress doesn't work to extend all or some of the 2001 and 2003 tax cuts, commonly referred to as the Bush tax cuts, many Texas ranchers will face devastating tax increases that could put them out of business.
The most critical tax increase facing ranchers is the revival of the estate tax at the staggering pre-2001 levels. If Congress does not act on the estate tax by the end of the year, estates worth just $1 million will be taxed at a rate of 55 percent.
"The math is simple. Penalizing ranchers for passing the ranching tradition on to the next generation will deplete our food supply which means the consumer, will pay much more for groceries. It could also diminish large portions of the open-range land Americans take pride in maintaining.
"Texas ranchers have consistently worked hard to support not only our families, but (also) every American citizen. We deserve better than to be taxed out of business," Scott said.
According to NCBA, 97 percent of American farms and ranches are owned and operated by families. The estate tax is considered to be one of the leading causes of the breakup of multigenerational farms and ranches.
Farm and ranch estates are five to 20 times more likely to incur estate taxes than other estates. According to the USDA Economic Research Service, one in 10 farm estates (farms with sales of $250,000 or more annually) were likely to owe estate taxes in 2009.
Scott warns ranchers that the estate tax isn't the only tax that will affect them. Potential tax increases including capital gains taxes, and income and dividend tax increases also pose potential devastation to Texas ranching families.
If Congress continues to sit idle on these taxes, the 33 percent income tax rate could return to 36 percent. The 35 percent rate would return to 39.6 percent. These increased tax rates would affect small business, including ranching families, earning at least $200,000 annually. The current 15 percent capital gains tax will increase to 20 percent. The dividends tax rate will increase from 15 percent back to income tax rates, which means up to 39.6 percent.
Other issues of concern to Texas cattle raisers include border security and immigration, the potential harm of cap-and-trade legislation, legislation expanding federal control of water and legislation prohibiting or limiting the use of antibiotics in the livestock industry. Click here for a complete list of issues.
"Texas cattlemen work hard to protect and preserve our natural resources, including land, water and our animals. Raising taxes and increasing regulations will only harm our industry and our domestic food supply," Scott said.