Veneman appeared with Rep. Bob Goodlatte, R-Va., chairman of the House Agriculture Committee, and the USDA’s Chief Economist Keith Collins at a Tax Day news conference in Washington yesterday.
“Tax Day is an appropriate time to highlight the president’s plan, which would save farm families $4 billion in taxes for 2003,” said Veneman. “Through his plan, the president hopes that by the next tax day, millions of Americans will be able to keep more of their own money to invest and spend.”
Veneman said that under the Bush plan, 85 percent of farm and ranch families would see some benefit. The savings include $2.3 billion from accelerating reductions in income-tax rates, marriage penalty relief and the increased child credit; $1.3 billion from eliminating the double taxation of dividends; and additional savings from increased small-business expensing, making 90 percent of all farm machinery and equipment tax deductible.
Take, for example, a farm family of four with an adjusted gross income of $80,000, including $37,500 in on-farm income and $2,200 in taxable dividends on which corporate taxes were already paid.
Under the current tax law, this family would face an estimated $9,866 in federal income taxes, before credits. The current child tax credit would reduce the family’s federal income taxes to $8,666.
Under the president’s proposal, their taxable income would fall from $59,850 to $56,100, and this family would face federal income taxes, after credits, of $5,735. After paying their federal self-employment tax, this family would benefit from total federal tax savings of 21 percent, or $2,931.
If the same family makes a large farm machinery purchase in 2003 and expenses an additional $48,500 in the first year under the President’s proposed tax changes, they would have a total federal tax liability of zero, and would receive a refund of part of the child credit.
In another example, a family of four with an adjusted gross income of $40,000, including $5,000 in on-farm income and $300 in taxable dividends, would have their total federal tax burden reduced by 62 percent, or $1,178.
“The president’s plan would provide well-timed stimulus to the economy,” said Veneman. “It would return much needed benefits to all taxpaying Americans, especially farmers and ranchers, and make April 15 a less taxing experience. I urge members of Congress – from both parties – to work together to pass the president’s plan.”