It was down to the wire in passing a deal between two warring parties in Congress and the White House to avoid falling off the "fiscal cliff," which would have seen tax increases and mandatory spending cuts to the U.S. budget.
While neither party got its way in the tax-and-spending agreement, U.S. Sen. Mike Johanns, R-Neb., said Nebraska fared well in the final outcome.
"The legislation protects about 99 percent of population from higher income tax rates," Johanns said. "I can say to the vast, vast majority of Nebraskans that the rates you have grown used to over the last 12 years are the rates that will apply to you. That is very positive."
The agreement between Congress and the White House also involved estate tax rates.
The agreement restored the $5 million exemption level for the estate tax, or $10 million per couple. It is indexed to inflation. If an agreement had not been reached, that exemption level would have fallen to just $1 million.
But the top estate tax rate increased from 35 percent to 40 percent on estates with a value greater than $5 million. All changes to the estate tax under the fiscal cliff package are permanent.
Johanns said the agreement involving the estate tax was important for Nebraska.
"The estate tax changes that were put in place two years ago that were so helpful to agriculture are now permanent," Johanns said. "Virtually every estate in Nebraska will pass without a death tax as long as that person has done some estate planning and has a good estate plan in place."
He said the certainty that the agreement brought to estate tax laws has been received well by Nebraska farmers and ranchers.
The average age of Nebraska farmers and ranchers is 55.9 years old, according to the U.S. Ag Census of 2007. That number has been increasing steadily since the 1940s, when the average age of Nebraska farmers and ranchers was 46.2 years.
Also, along with record cropland and grassland values, the number of farms and ranches in Nebraska has declined since 1940, when there were more than 121,000 farms and ranches in the state. According to the U.S. Department of Agriculture, that number was 46,800 in 2011. The average-size farm or ranch in 1940 was 391.1 acres, compared to 972 acres in 2011.
"If this (estate tax) bill had not passed and we went back to a 55 percent rate and a million-dollar exemption for a single person, at the end of the day, what you end up with is land sales," Johanns said. "Getting this done was a gigantic step, and making it permanent was so important for our state."
He also pointed out the permanent capital gains tax provisions that retained the lower rate of 15 percent for income under $400,000 for a single person and $450,000 for a married couple. If Congress had not fixed the law, the capital gains tax would have gone up to 20 percent on Jan. 1.
But Johanns was frustrated by Congress' inability to pass a new Farm Bill. Johanns, who serves on the Senate Agriculture Committee, helped write a new Farm Bill, which passed in the Senate, along with the House Agriculture Committee. But those efforts came to a halt as the House version of the Farm Bill did not reach the floor for a vote.
Extending the 2008 Farm Bill instead did not include the cuts in the nutritional part of the bill, which accounts for more than 80 percent of the bill's five-year cost. The Senate slashed $23 billion from its version of the Farm Bill, and the House Ag Committee made even larger cuts.
Both the Senate and House versions would have eliminated direct payments for corn, soybeans, wheat and other crops, which were costing taxpayers about $5 billion annually. By extending the 2008 Farm Bill, direct payments will be continued for 2013.
Johanns said getting a new Farm Bill through the Senate Agriculture Committee, then through the Senate and then through the House Agriculture Committee was an "uphill battle all along the way."
But to have it stopped at the end by the House leadership was characteristic of many of the problems faced by Congress last year.
Johanns said it's unfortunate that a lot of the legislation passed in Congress results from an agreement reached by a handful of people.
"We should be working legislation up through our committees, voting on it and debating on it and moving it to the floor, if there are the votes to do that, and then debating it on the floor," he said. "Unfortunately, instead of doing more of that, which I believe would be helpful to the country in solving problems, it just seems to me that each year we do less and less of that. That is not good."
"We will go back to work and do a Farm Bill," Johanns said.
But that could be a challenge as writing a Farm Bill has as much to do with regional differences in the type of crops that are grown, such as rice and peanuts versus corn and wheat, as with party or political differences.
"That is the reality of farm policy," Johanns said. "You get these debates that have nothing to do with your party registration but have a lot to do with regions and crops, different growing conditions and a host of issues."
But Johanns believes the Farm Bill template, which was passed by the Senate Agriculture Committee and was highly praised by many farm groups across the country, will be what the Senate passes.
"I think we can get a Farm Bill out of committee, and hopefully we can get floor time and an open amendment process," he said. "I continue to be confident that, on the Senate side, we can get it done."