In 2012, the average age of principal farm operators was 58.3, up 1.2 years since 2007, with 257,697 farmers 75 or older in 2012, compared to 243,472 in 2007, according to a preliminary report from the Department of Agriculture's Census of Agriculture, taken every five years. The number of principal farm operators 65 to 74 rose from 412,182 to 443,558, and from 55 to 64 from 596,306 to 608,060, while numbers of those 45-54 dropped by nearly 100,000, and those 35-44 by more than 50,000, continuing a 30-year trend of aging farmers.
While not all principal farm operators are also the landowners, the average age of farm owners remains high. But, in a strange twist of fate, that might not be a bad thing for the future of America's farming industry, because it actually saves money to leave a farm as part of an estate than to pass it down to the next generation while still alive.
"The combination of state and federal taxes in effect on 2013 returns varies by state but can easily approach 30 percent or more in many locales, with California, New York, Oregon and Minnesota collecting the largest shares," Marcia Zarley Taylor reports for DTN The Progressive Farmer. "California's combined 33 percent top rate would be the third highest among industrialized countries," according to the Tax Foundation. (State-by-state tax rates on capital gains)
David Brown, a Des Moines attorney who specializes in certain tax-free exchanges, said that means in a state such as Iowa "taxes can easily whittle a $1 million farm gain down to $660,000," Taylor writes. "That's because there's a potential tax of 34 percent for income over $450,000."
"New capital gains rates apply for those with high adjusted gross incomes, but not necessarily high taxable incomes, others point out," Taylor writes. "For taxpayers who hit the new 39.6 percent marginal rate, the maximum capital gains rate is 20 percent (plus the new 3.8 percent Medicare surtax, if applicable), for a maximum 23.8 percent federal capital gains rate or almost 25 percent if the taxpayer has a large amount of itemized deductions. California's top rate adds another 13.3 percent to that burden." The result is that seniors are holding onto their land, knowing they can pass it on to their heirs with all past capital gains forgiven at death. (Read more)
While not all principal farm operators are also the landowners, the average age of farm owners remains high. But, in a strange twist of fate, that might not be a bad thing for the future of America's farming industry, because it actually saves money to leave a farm as part of an estate than to pass it down to the next generation while still alive.
"The combination of state and federal taxes in effect on 2013 returns varies by state but can easily approach 30 percent or more in many locales, with California, New York, Oregon and Minnesota collecting the largest shares," Marcia Zarley Taylor reports for DTN The Progressive Farmer. "California's combined 33 percent top rate would be the third highest among industrialized countries," according to the Tax Foundation. (State-by-state tax rates on capital gains)
David Brown, a Des Moines attorney who specializes in certain tax-free exchanges, said that means in a state such as Iowa "taxes can easily whittle a $1 million farm gain down to $660,000," Taylor writes. "That's because there's a potential tax of 34 percent for income over $450,000."
"New capital gains rates apply for those with high adjusted gross incomes, but not necessarily high taxable incomes, others point out," Taylor writes. "For taxpayers who hit the new 39.6 percent marginal rate, the maximum capital gains rate is 20 percent (plus the new 3.8 percent Medicare surtax, if applicable), for a maximum 23.8 percent federal capital gains rate or almost 25 percent if the taxpayer has a large amount of itemized deductions. California's top rate adds another 13.3 percent to that burden." The result is that seniors are holding onto their land, knowing they can pass it on to their heirs with all past capital gains forgiven at death. (Read more)
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