Ag Policy Blog

People from China, Russia, Iran, North Korea, Cuba and Venezuela would pay a 60% excise tax if they are trying to buy farm ground in the U.S. under a tax bill introduced by the House Ways & Means Committee.

The committee will markup a set of tax bills on Tuesday that includes several provisions for extending bonus deprecation and expanding Section 179 deductions and the creation of rural opportunity zones.

The "Build it in America" bill, H.R. 3938, would require buyers from "a country of concern" or private businesses that are 10% or more owned by businesses or people from those countries, to pay a 60% excise tax on any purchase of farmland.

The House had voted overwhelmingly (407-26) back in March on a provision to ban Chinese ownership of farm ground as part of an energy bill.

Florida Gov. Ron DeSantis, a Republican, signed a bill into law last month banning people from China, Cuba, Iran, North Korea, Russia, Syria and Venezuela from buying agricultural land or land near military installations.

Chinese entities own about 384,000 acres of agricultural land in the U.S., out of more than 40.8 million acres of farmland owned by foreign nationals.

The tax bills being debated in committee on Tuesday have other provisions also germane to farmers or rural businesses as well.

Politico noted the bills are likely markers for negotiations on a possible tax bill later this year.

BONUS DEPRECIATION

The bill would extend 100% bonus depreciation for qualified business property placed into service after Dec. 31, 2022, and before Jan. 1, 2026 -- expanding on current sunset provisions.

SECTION 179

Under the Small Business Jobs Act, H.R. 3937, producers buying larger machinery could more immediately expense that equipment as well. The current Section 179 tax law allows immediate expensing of up to $1 million in equipment for small businesses with a $2.5 million cap on total equipment purchases. Above $2.5 million, the $1 million expensing benefit is whittled away dollar for dollar. The bill would expand the $1 million deduction to $2.5 million and increase the cap to 4 million.

The bill would also reduce some costs for farmers and small businesses by changing the requirements for sending out 1099 forms. Currently businesses must send out those forms for any payment to a contractor of $600 or more. The bill would extend that requirement out to $5,000 or higher.

RURAL OPPORTUNITY ZONES

Corporations that create a "qualified rural opportunity fund" as an investment vehicle in rural areas would get a tax break on capital gains for investing in certain area considered more than 50% rural under the Census Bureau.

STANDARD DEDUCTION

The Tax Cuts for Working Families Act, H.R. 3936, would change the name of "standard deduction" on the 1040 to "guaranteed deduction." The bill would increase the deduction for married couples to $4,000, or $3,000 for head of household.

For a married couple making median household income nationally, the deduction change would save about $480 a year in taxes.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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