In large numbers, Young Farmer and Rancher members of the Farm Bureau are expressing their strong support for a capital gains tax bill introduced by Reps. Lee Terry (R-Neb.) and Earl Pomeroy (D-N.D.).
Members of YF&R groups within each state Farm Bureau have been contacting their House and Senate representatives to express their support of House bill, H.R. 2034, and for similar legislation to be introduced in the Senate.
The Beginning Farmers and Ranchers Act of 2005 would eliminate capital gains taxes for farmers and ranchers who sell their agricultural land to a beginning producer, and also would provide a 50 percent capital gains exemption to farmers and ranchers who sell their agricultural land to an existing producer. In both cases, the land is to stay in agricultural production for 10 years from the time of purchase.
A third option is a 25 percent capital gains exemption for farmer-and-rancher-sellers no matter who buys the land. In all cases, the maximum capital gains exemption allowed would be $500,000 per year.
"High land prices really limit the potential for beginning and young farmers and ranchers with small operations to expand," said Ben Boyd, chairman of the national YF&R committee. "Passing a bill like the one introduced in the House definitely would increase the likelihood that farmland will be offered to producers rather than land-speculating developers. Once developers get their hands on land, it isn’t likely to stay in agricultural production for very long.
"Young farmers and ranchers cannot out-bid developers, but if the original landowner gets a tax break for selling to a producer rather than a developer, then the land can be sold for less without the landowner losing," Boyd said.
A survey of Farm Bureau young farmers and ranchers across the nation earlier this year showed that availability of affordable land was the number one concern for the future of these producers.
Boyd said, "The bill specifies the land is to stay in production for a minimum of 10 years, and having this land in production will go a long way toward maintaining affordable food prices for all Americans."