House Passes Tax Relief Package

A $550 billion tax relief package aimed at boosting the economy and helping small businesses, farms and ranches passed the House today, putting into place many of the initiatives outlined in the President's economic stimulus package. 

The Jobs and Growth Tax Reconciliation Act of 2003 (H.R. 2) passed by a vote of 222 to 203, and contains a number of provisions that USDA estimates will provide more than $4 billion in benefits to U.S. farmers and ranchers in the first year.

"This legislation will put much-needed benefits into producers' pockets," says Jay Truitt, executive director of Legislative Affairs, National Cattlemen's Beef Association (NCBA).  "Any legislation that helps revitalize small businesses and family cattle operations is good for America."

More than 97 percent of all farms and ranches should be able to take advantage of either bonus depreciation or dramatic increases in expensing levels. Economists estimate that for most family operations, the changes in the code will significantly reduce the tax burden on those operations.

In addition, the House bill includes a 25 percent reduction in capital gains, from 20 percent to 15 percent in most tax brackets, and increases the Alternative Minimum Tax (AMT) exemption for couples by $15,000.

Provisions in H.R. 2 include:
 

Acceleration of 2001 Bush Tax Cuts for Individuals

*         Child credit. Increases child credit to $1,000 for 2003-2005.

7         10 percent bracket. Accelerates the expansion of the 10 percent bracket for 2003-2005.

7         Marriage penalty relief. Accelerates the expansion of the 15 percent bracket and the increase in the standard deduction for married persons filing joint returns for 2003-2005.

7         Individual rate cuts. Accelerates the 2006 individual rate cut schedule to 2003. (Rates reduced from 28 percent to 25 percent; 31 percent to 28 percent; 36 percent to 33 percent and 39.6 percent to 35 percent.)

7         Increase individual AMT exemption amount. Increases the AMT exemption amount by $7,500 for single persons and $15,000 for joint filers for 2003-2005.

Business and investment incentives

7         Bonus depreciation. Increases bonus depreciation from 30 percent to 50 percent and extends through December 31, 2005.

*         Small business expensing. For 2003 through 2007, increases the amount small businesses can expense (immediately deduct) from $25,000 to $100,000. Increases definition of small business from $200,000 of capital purchases to $400,000. Provisions are indexed for inflation.

*         Net operating loss carryback. Extends the 5-year net operating loss carryback for three years (2003 through 2005) and holds taxpayers harmless for AMT.

Dividends and capital gains

*         Dividend and capital gain tax rate reduction 5/15. Reduces the tax rate on dividends and capital gains to 5 percent for taxpayers in the lowest tax brackets and to 15 percent for all other taxpayers.

"NCBA supported the President's Jobs and Growth Package and has supported both the House and Senate versions of the legislation," says Truitt.  "Cattle producers can be proud of the work accomplished this week in Washington, and we look forward to passage in the Senate in the coming weeks."

In the Senate, the Finance Committee passed a $350 billion dollar package late Thursday evening that included $433 billion in tax cuts and $85 billion in offsets. In another win for cattle producers, Sen. Craig Thomas (R-Wyo.) amended the final draft to include language similar to the Rancher HELP Act passed in the House, which would allow the sale of livestock due to drought to be exempt from capital gain penalties as long as the funds are reinvested within four years.