To bring in the New Year, the Senate voted early Tuesday morning on legislation addressing the impending “fiscal cliff” that also included a one-year extension of the farm bill.
The farm bill extension included a proposed modified Dairy Security Act as the one major change in the bill that passed 89-8. The bill will now go to the House that is running out of time before the new Congress is sworn in on Jan. 3.
Many in agriculture have expressed disappointment in the slow progress of the farm bill.
“A last-minute extension of current law or a short-term Band-Aid by Congress is better than no action but falls short of what farmers truly need: a comprehensive five-year farm bill,” said Ohio Corn & Wheat Growers Association Executive Director Tadd Nicholson. “Versions of the farm bill considered by the House and Senate for months would have saved at least $23 billion in the federal budget, including significant fiscally responsible reforms initiated by grain farmers. Instead of taking that savings, Congress allowed the farm bill to get caught up in Washington politics and postponed their work for another day. The failure to pass a farm bill means Ohio farmers will go into 2013 looking at an uncertain future without an enhanced safety net to guard against risks beyond their control.”
With regard to the fiscal cliff, the bill extends the current $5 million estate tax exemption. The tax rate on estates over $5 million would increase from 35% to 40%. It also makes permanent current capital gains and dividends rates for families earning less than $450,000 while changing the rate to 20% for families making more than $450,000. It also permanently extends current tax rates for families earning less than $450,000 a year.
It addition, the bill permanently patches the Alternative Minimum Tax. This tax was originally designed to prevent high-income earners from using exemptions to avoid paying income taxes but did not automatically adjust for inflation.
The bill replaces two months of the approximately $100 billion across-the-board spending cuts known as sequestration scheduled to start in January.