Secretary of Agriculture Tom Vilsack told Farm Progress in an exclusive interview that for farmers, ranchers and people living in rural communities he hopes the tax package being worked on in approved by Congress. He says there are a number of reasons that this bill is important for rural America.
"Anyone who is interested in the biofuel industry in rural America has got to be interested in this piece of legislation," Vilsack said. "It continues the ethanol tax credit and also resumes the biodiesel tax credit; very important in terms of those industries that are maturing. They are job creators and income creators for farmers and ranchers."
When the biodiesel tax credit expired at the end of last year 50% of production was shut down resulting in the loss of 12,000 jobs. Vilsack says there is a growing consensus that the tax credits need to be continued or resumed and in addition to creating or bringing jobs back, it is a signal to the industry of the President's commitment to the industry.
"There may be some conversations and discussions about how much the credits need to be and what they need to be used for," Vilsack said. "Obviously we need to take a look at the need for flexible fuel vehicles or the need for blender pumps that will allow us to not only produce more ethanol but make sure that we market it."
Another part of the bill of particular interest to agriculture are the provisions for the estate tax. Without action the estate tax is set to revert to 2001 levels of a $1 million exemption and a 55% tax rate on Jan. 1, 2011. The bill provides a $5 million exemption and 35% rate for the next two years, although Congress must act by the end of next year or the estate tax will revert to 2001 law.
"To me, anything we can do to provide some degree of certainty for a couple of years is important," Vilsack said. "And that will give us an opportunity to have a greater and larger tax debate and discussion as we deal with a very complex set of budget issues."
Vilsack also said that the provision in the tax bill that would zero out capital gains taxes on machinery and equipment in the coming year will encourage folks to consider purchases this year that they may have been putting off for some time. Those purchases will act as a stimulus putting money into the economy.
"I think it is also important to recognize that this will allow tax cuts that are in place today to continue," Vilsack said. "So folks in middle income families are not faced with serious tax increases at a time when we are trying to get this economy to recover at a faster speed."
To listen to the entire interview with Secretary Vilsack, use the audio player above.