By Lisa Martone
DES MOINES-- If we do go over the fiscal cliff, everyone will be affected by either the tax hikes or spending cuts. Iowa farmers may be the most venerable and most impacted.
"Fertilizer has gone up three to six hundred percent in the last four years, seed has about doubled ...rent's gone up a huge amount," said Iowa corn farmer Tim Broderick.
And that wallet could get more strained for Iowa's farmers. Currently, the Federal Estate Tax doesn't apply to anyone with assets under five million dollars. Many small farms are under that amount. But if Congress fails to act on the looming fiscal cliff, that five million will drop to one million.
"With land selling from $12,000 to $20,000, well it doesn't take much land to hit that target right away," said Broderick.
Another blow is how much the estate tax rate could soar. Currently, it's at 35 percent. It we go over the cliff that jumps to 55 percent.
"That's a big problem because most farmers primarily own land and equipment, so where are they supposed to come up with that cash to pay that estate tax bill?" asked Scott Schmailzl of Schmailzl Financial Group.
Schmailzl is a certified financial planner who works with farmers to help plan their estates. He says there are a couple things they can do to buffer from the fall.
First, split up the estate between married couples, so each can take advantage of the exemptions. Or draft trusts. You can also offset the tax with life insurance investment plans.
"There are ways to draft different types of trusts that will help minimize the estate tax planning bill, then the other option they have, is to offset that estate tax by using vehicles such as life insurance policies and items like that," he said.
So with just 25 days left to come to an agreement, Iowa's farmers' eyes are locked on Congress.
"Well you have no choice but to wait and see what happens," said Broderick. "Yea, you want to be aware of what possibilities could occur on December 31st or January 1st."
Financial professionals are predicting congress will come to some kind of middleground. But even if they do, it's likely the tax rate and exemption amount will change.