ROSWELL, N.M. (KRQE) — While a deal is near, Congress and the President
will not beat the midnight deadline to avoid the fiscal cliff. Farmers and ranchers throughout New Mexico are watching the deal closely, because right now they could be facing a huge tax hike.
Agriculture plays a big role in the southeast and throughout the state and it's the estate tax that has farmers and ranchers very concerned.
In Roswell, farmers and ranchers are worried they could soon be paying a lot more in taxes.
"It really equates to very hard times for everyone," explained Sandra Barraza, Chaves County Agriculture Agent. "So here we're looking at you know, looming tax increases, and it is just another hit to take."
Currently, estates worth more than $5 million are taxed at a 35 percent rate. If no action is taken, tax rates will increase to 55 percent, and will affect estates worth just $1 million. If that happens, those in agriculture say would hurt a lot of small business.
"You know that's the thing about farmers and ranchers is yes, many times people think that they're just millionaires but they may not have cash in their pockets, their assets are in their property," said Barraza.
Ranchers know the estate tax will change when a new deal is reached. They are just hoping it doesn't go back to levels during the Clinton administration, which are set to take place Jan 1.
One concern is that taxes would be too high to keep family operations in the family.
"If a lot of family farms are forced out of business because of poor estate planning, essentially our small family farm operations are just going to be a thing of the past, and you're going to see larger, corporate farms come into place," said Cliff Pirtle, (R) New Mexico Senator for District 32.
Pirtle is a fifth generation farmer in the Pecos Valley. For those that can still operate, Pirtle said a significant tax spike can still hurt the local economy.
"Farmers are like any other small business, when taxes go up, we have less money to operate with, and then we're not able to hire and employ people in the area," Pirtle explained.
But it wouldn't just affect those in agriculture.
"It would affect everybody, a lot of people just think that they're food comes from the grocery store and it doesn't, farmers and ranchers produce that food," said Barraza.
Negotiators on both sides said the estate tax will likely increase, it is just a matter of how much. Democrats would like higher taxes for estates worth more than $3.5 million. Republicans would like it to stay at $5 million, but don't want it to go lower than $4 million.
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New Mexico is located in the southwestern region of the U.S. Inhabited by Native American populations for many centuries, New Mexico has also been part of Imperial Spain, part of Mexico, and a U.S. territory.