Brockett’s Ag Advice
ML By John E. Brocket!
4H Farm Management Agent
J Lewistown Extension Office
jwmKw
Tax Proposals of Interest
The Senate Finance Committee
has come up with the most
revolutionary tax law proposal
since I started working with
financial management and taxes.
It is so much of a change that no
one is venturing a real estimate as
to the ultimate effect it will have on
our nation’s economic and social
structure. Some people are even
having second thoughts as to
whether they are in favor of
venturing into this unknown
financial jungle. As one columnist
recently said “many of the present
laws were enacted to adjust a
social problem will the proposed
changes cause more problems
than they solve?” At any rate, a
few of these changes are outlined
below.
Tax rates are to be adjusted to 15
percent for married people filing
jointly with taxable incomes less
than $29,300 and 27 percent for
those with taxable incomes over
that amount. The threshhold for
single people is $17,600. That
sounds like good news until you
hear about the deductions that will
no longer be available.
The standard deduction will be
raised to $3BOO for married people
filing jointly in 1987 and $5OOO in
1988. The standard deduction for
single people will be $2570 and
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$3OOO respectively. Personal
exemptions will be raised to $l9OO
in 1987 and $2OOO in 1988. The ad
ditional exemption for those over
65 will be eliminated for 1987 and
beyond. Instead, the standard
deduction will be increased by
$6OO.
Others that may affect many
middle class people are:
1. No more two earner deduction
(affects all families where both
husband and wife work).
2. Elimination of income
averaging (affects those who sell a
property or receive a large bonus
in a given year).
3. Increased earned income
credit (affects those with earned
income below a certain amount to
be set each year—sll,ooo in 1986).
4. Eliminate sales tax as a
deductible item.
5. Increased the non deductible
portion of medical expenses to 10
percent of income from the present
5 percent.
6. Eliminated the partial
deduction of contributions for
people who do not itemize.
7. Eliminate all miscellaneous
deductions.
8. For all practical purposes, the
2106 employee business expenses
are eliminated except for those
who itemize.
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Some business tax changes that
will affect most farmers are (a)
increased life for most depreciable
items, (b) elimination of in
vestment credit, (c) elimination of
the use of the 60 percent exclusion
for capital gains, and (d)
elimination of the deduction for
land clearing.
One of the most controversial
changes is the elimination of the
IRA as a “Tax Deferment”
deduction. Actually, the change
will not affect full time farmers.
The change in the use of IRA’s is a
step back toward its original in
tention, “making ” retirement tool
Elverson Youth Receives FFA Leadership Scholarship
LEESPORT - Kevin Stoltzfus,
17-year-old son of Mr. and Mrs.
Gerald Stoltzfus of R 2 Elverson,
has been named the winner of the
1986 Pa. FFA Washington
Leadership Conference scholar
ship.
Kevin was recently elected
president of both the Twin Valley
FFA Chapter and Berks County
FFA Association for the 1986-87
school year. Kevin has previously
served as sentinel and vice
president of the Twin Valley
Chapter and parliamentarian of
the Berks County Association. As
an active FFA member he has
served on the banquet committee,
safety committee, community
service committee, and enm
□ Dairy Sam*
□ Uvavteek Shatter*
□ Riding Aranas
* * &
V
for those who had no other
retirement plan.” Even for those
with other retirement plans, there
is still a possibility for saving
money with taxes on the interest
being postponed (deferred) until
the money is withdrawn.
A change that may have a long
range effect on farming is the one
limiting the amount of loss from
farming that can be used against
other income. This coupled with
the loss of investment credit and
the reduction of depreciation
deductions in one year by ex
tending the depreciable lives of
plot committee. The paper has participated in
Kevin has participated in many service projects at Hay Creek,
contests on both the county and Zerbe Sisters, and Tel-Hai; as well
state level having been involved in as Food for American programs at
public speaking, where he received the Twin Valley Elementary
a gold medal in the state creed schools, and tree planting for the
speaking contest in 1984. He was a Pennsylvania Game Commission,
member of the chapter Kevin looks forward to a
parliamentary procedure team in stimulating leadership conference
both 1985 and 1986, serving as a in Washington, and hopes to use
presiding member this year. In the knowledge gained from this
1985 he received a gold medal in experience to lead both the Twin
the state salesmanship contest. Valley and Berks County FFA’s.
Additionally Kevin has shown his Following graduation from high
Guernsey heifers at local fairs and school Kevin hopes to become a
the Southeastern PA FFA Junior state FFA officer and a dairy
Dairy Show, The Pa. FFA Junior farmer.
Dairy Show, and the Pennsylvania The award is sponsored by the
Farm Show. Contel Service Corporation of
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Lancaster Fanning, Saturday, July 12,1986-C3
business property will cause many
non-farm people to leave fanning.
That result could be advantageous
to agricultural prices, if not to
agriculture itself.
One of the changes that will
probably cause the most problems
to middle class families is the one
discussed last week denying a
personal exemption to dependents.
This in effect could cause a family
of four to be liable for filing at least
three tax returns for the Federal
government. I wonder whit the
IRS auditor will ask the 4-year-old
taxpayer in an audit.
Atlanta, Ga.
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9 Center Square
Waynesboro, PA 17268
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