NDSU Extension - Ramsey County


| Share

December 13 Agriculture Column


The tax agreement pending in Congress is set for a vote this week, leaders in both parties House and Senate, have said it will pass and other leaders have said it will not pass. I am thinking Las Vegas may not be taking bets on the legislative action.  With an extension of the Ethanol credits, restoration of the biodiesel credits, and some relief on the estate tax, agriculture has a lot at stake in the vote. Do we really know what is in the legislation?    The question becomes how will it affect agriculture if passed?   The following was taken from the “Drovers cattle journal” (1) The 2001 income tax rates would continue through 2012, including the top individual rate at 35% and the capital gains rate at 15%.  (2) 100% bonus depreciation would be available for qualified assets put into service between Sept 10, 2010 and the end of next calendar year. For 2012, the bonus depreciation would decline to 50% of the adjusted basis. Beginning in 2012, expense method depreciation would be set at $125,000, with a phase-out beginning at $500,000 of qualified purchases for the year.  (3) The ethanol subsidy would be extended through the end of 2011 with the 54¢ tariff on imported ethanol. The blenders’ credit will continue, but the rate would decline from 45¢ to 36¢. The biodiesel credit, which expired a year ago would be restored, at the $1 per gallon rate, and applied retroactively to the biodiesel produced in 2010, but unable to obtain the credit benefits.  (4)  Alternative Minimum Tax could become an issue, and the agreement would increases the minimum rates that would be applicable. The AMT exemption is set at $47,450 for individuals for 2010, $72,450 for those filing as married filing jointly. In 2011, the exemption will be $48,450 for individuals, $74,450 if filing status is married filing jointly.”   (5)  A 35% estate tax rate and a $5 million exemption are established through 2012. Since 2010 does not have any estate tax, there are some uncertainties for property inherited in 2010 and liquidated in 2011 and after.  (6)  Self -employed persons would pay 10.4% on self employment income up to $106,800 for 2011. That is down from 12.4%, and is a result of the rate cut for the employee portion of the FICA.   It will be interesting to see what happens this week.


            Dec. 24                         Closed for Christmas

            Jan. 4-5                         Lake Region Extension Roundup

            Mar. 8                           Pesticide training, Hampden

            April 5                           Pesticide training, Devils Lake

The tax cut agreement contains benefits for ethanol and biodiesel, as well as reduces the estate tax in the next two years. It also reduces the self employment tax, and keeps the income tax rate at lower levels, along with the capital gains tax. There are questions on whether Congress this week will approve or defeat the agreement, which is supported by the White House, the Republican caucus, the Congressional leadership, but not the Democratic caucus.

By Stu Ellis, University of Illinois


Creative Commons License
Feel free to use and share this content, but please do so under the conditions of our Creative Commons license and our Rules for Use. Thanks.