02/23/06 Ag wants Capital Gains tax extension

While much of the budget talk coming from Washington D.C. lately has centered on President Bush's proposed fiscal year 2007 budget, one thing to keep in mind is that it was just a week ago that the President signed the 2006 budget reconciliation act into law. Congress meanwhile must still deal with the issues of proposal tax cuts from the fiscal year '06 budget. That includes separate resolutions from both chambers offering tax cuts in one form or another. WOLFF: The budget set aside $70 billion dollars for a tax cut. Both the House and Senate have passed their bills. Both the House and Senate have appointed conferees. And some time between now and the middle of March, we expect them to come up with a final version for Congress to vote on. And according to American Farm Bureau Federation tax specialist Pat Wolff, that is where things could get interesting. The Senate version of the tax relief measure offers special cuts with an emphasis on an extension of the alternative minimum tax exemption. The House version, however, would address an extension of the Capital Gains Tax decrease enacted in 2003. WOLFF: Right now the top rate is fifteen per cent. That's down from twenty per cent. That's set to expire at the end of 2008. And in the mix for this bill is a provision that would extend that bill for another two years, through 2010. And Wolff says if farmers and ranchers were given a choice, they would most likely side with the House version of the tax relief bill. WOLFF: $70 billion dollars is a lot of money, but its not enough money to do both a two year extension of capital gains, and an extension of the alternative minimum tax exemption. And that's where the rubber hits the road and over the next three to four weeks, conferees have to figure that out, how to make it fit into a $70 billion dollar package. Most important to farmers and ranchers is a continuation of that lower capital gains tax rate. What that would mean to agribusiness owners and operators, according to Wolff, is not just more money in the pockets of farmers and ranchers. WOLFF: Tax breaks stimulate the economy and tax breaks especially capital gains tax rates make agriculture more profitable. And when you have a thriving economy and a profitable agricultural industry, that increases revenues to the government. An argument Wolff and other ag supporters hope Congress will see as they reconcile the tax relief bills into a single measure.