Ag Policy Blog

180 Farm Groups Urge Congress to Preserve Section 199 Deduction

Jerry Hagstrom
By  Jerry Hagstrom , DTN Political Correspondent

A coalition of 180 farm and agribusiness groups has written House Speaker Paul Ryan, R-Wis., and House Minority Leader Nancy Pelosi, D-Calif., urging them to preserve the deduction for co-op production and marketing expenses known as Section 199 in the tax bill.

The bill that the House Ways and Means Committee passed last week eliminates the deduction that co-ops pass along to their members. Section 199 is generally known as the Domestic Production Activities Deduction,

“In its current form, H.R. 1 repeals Section 199 with the assumption that cooperatives and their members would benefit from the proposed reduced corporate and individual tax rates,” the farm leaders organized by the National Council of Farmer Cooperatives wrote.

“However, the math does not add up for the farm sector. Farmer-owned cooperatives are not taxed like traditional corporations, so they cannot benefit from lower corporate rates like most other industries. Even more troubling is that for many farmers, changes to the individual tax code would not be enough to offset the loss of the Section 199 agriculture deductions.”

“A proposal adopted during the House Ways and Means Committee mark-up would create a rate cut for the first $75,000 of business income for certain taxpayers,” the letter said.

“While intended to compensate for the repeal of Section 199, initial assessments find that this proposal in no way compensates for the loss of the value and flexibility afforded by the Section 199 deduction, and adds needless complexity to the tax code.”

The House is expected to vote on the tax bill on Thursday after the House Rules Committee issues a rule on Wednesday.

The Senate Finance Committee is considering the Senate version of the bill this week.

National Council of Farmer Cooperatives…


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