THE BEGINNING FARMERS AND RANCHERS TAX INCENTIVE ACT OF 2003
Mr. HAGEL. Mr. President, I rise today to discuss S. 1464, legislation I recently introduced with Senator Dorgan to provide a capital gains tax incentive to agricultural producers on the sale of their farm or ranch land.
Agriculture is a vital engine that helps drive this Nation's economy. But this engine is only as powerful as the next generation of producers. The relentless financial problems facing the agricultural sector, particularly for beginning farmers, are daunting. It is often difficult for beginning farmers to compete for land with large capital-based operations. S. 1464 helps level the playing field by easing the transfer of land between the old and new generations of farmers and ranchers.
S. 1464, the Beginning Farmers and Ranchers Tax Incentive Act, would provide all agricultural producers selling their property to a beginning farmer or rancher a 100-percent reduction of their capital gains tax rate. Producers selling their land to someone who pledges to keep the land in agricultural production would receive a 50-percent reduction of their capital gains taxes. All producers selling their land would receive an automatic 25-percent reduction of their capital gains taxes.
These incentives would encourage repopulation of the rural landscape with a new generation of young, energetic agricultural producers.
Family farmers and ranchers often do not benefit from some tax incentives already in place for other Americans. In 1997, Congress enacted a $500,000 capital gains tax exclusion for home sales. Unfortunately, this provision often does not benefit family farmers since their homes are typically included as part of the larger farmstead. S. 1464 would correct this inequity by extending the $500,000 exclusion to farmers and ranchers.
It is imperative that we do more to ensure that beginning farmers and ranchers are given opportunities to succeed in strengthening rural communities. S. 1464 helps do this by reducing the tax burden on retiring farmers and ranchers, so that the continuity of agricultural production remains unbroken from one generation to the next.