Tax Debate Not Germane for House Aggies

House Ag Advances Funding for Budget Reconciliation Package in Party-Line Votes

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The House Agriculture Committee voted Monday to approve nearly $66 billion in funding that will go into the House reconciliation package, known as the Build Back Better Act. Democrats on the committee agreed with Republicans that they oppose tax increases on farmers, but they would not vote with Republicans on those amendments. (DTN file photo)

OMAHA (DTN) -- Members of the House Agriculture Committee rose early Monday to vote along party lines to advance nearly $66 billion in spending for research, rural development and forestry programs that will be rolled into the potential $3.5 trillion budget reconciliation bill.

The vote, including a series of amendment roll-call votes that also fell along party lines, came after the committee held a virtual markup Friday on the reconciliation bill -- dubbed the Build Back Better Act -- that carried late into the evening.

The committee approved sections of the bill including just under $66 billion in spending: $7.75 billion in agricultural research initiatives, $18 billion in rural development, and $40 billion in forestry programs. The biggest-ticket items approved by the committee dealt with boosting funds to manage forest fires. (…)

At some point, the committee also will return to debate and vote on $28 billion to boost conservation programs at USDA by focusing on climate-smart agriculture to add to the final package.

The committee's 24 Republicans, who are in the minority, made clear they were "absolutely" or "emphatically" no votes to the new spending measures. Only one of the 27 Democrats, Rep. Cindy Axne, D-Iowa, crossed party lines on a single amendment to vote with Republicans on it. That came on an amendment to provide disaster funding for 2020 and 2021 that the committee had already approved in a bipartisan vote earlier this year.

On Friday, Democrats were in line with marching orders to reject any amendments to the bill. Republicans introduced several amendments looking to protect farmers from tax provisions expected in the reconciliation bill that will increase capital gains while reducing assets allowed to be transferred to heirs tax free, known as stepped-up basis.

Republican moves to block the tax provisions were ruled as "non-germane" because the Agriculture Committee does not deal with tax policy. GOP committee members introduced language to offer the "sense of the committee" that both parties oppose the tax changes. Democrats repeatedly said they agreed with the GOP effort, but they also unanimously repeatedly rejected the amendments in voice votes.

"Democrats and Republicans both agree this will be very damaging," said Rep. David Scott, D-Ga., chairman of the committee.

The tax debate led to some heated exchanges. Republicans said the unanimous voting by Democrats reflected the committee markup was just for show.

"The administration has promised an exemption to make sure farmers don't pay higher taxes, but they have steadfastly refused to offer a single scrap of technical explanation about how this exemption would work despite the extraordinary complexity we all know it would entail," said Rep. Glenn "GT" Thompson, R-Pa., ranking member of the committee.

The arguments over tax provisions went on for hours. "We are here to advocate for farmers," said Rep. Michelle Fischbach, R-Minn. "This is something we absolutely need to stand out on."

For more on stepped-up basis, see: "What to Know About the Debate Over Stepped-up Basis and Capital Gains Taxes" here:….

Republicans have nearly every major farm group in their camp opposing the tax plans for stepped-up basis. To underscore the opposition, the farm organization most closely aligned with Democratic priorities -- the National Farmers Union -- sent a letter on Friday to congressional leadership stressing that NFU opposes the potential changes. NFU stated the group commends congressional leaders for "working to secure historic investments" through the budget reconciliation, but not at the expense of those tax benefits for farmers.

"However, we also must reiterate and restate our deep concerns with the continued conversations about altering or eliminating long-standing tax provisions that are essential to the economic well-being of our members and small businesses in rural communities. NFU opposes elimination of the 'stepped-up basis' at death on the appreciation of assets, such as land, that family famers and ranchers rely on to produce the food, feed, fiber and fuel that all Americans depend on."

Republicans also introduced amendments to modify the $40 billion in forestry, such as removing the Biden plan in the bill for a Civilian Conservation Corps, as Republicans noted there are similar programs in the U.S. Forest Service Jobs Corps Program. Other amendments sought to aggressively remove dead timber from Western forests. The amendments were repeatedly rejected.

"As I mentioned, the West is burning down; an area the size of Delaware is burning now," said Rep. Doug LaMalfa, R-Calif., adding dead trees will become the next source of fire and fuel. "So, we can't be afraid of taking salvage timber out and doing something positive with it."

Rep. Dusty Johnson, R-S.D., also offered a plan to spend $75 million to boost foreign-disease protections to help protect the country against the possible introduction of African swine fever. Johnson noted if ASF showed up in the U.S., "It would stop our exports absolutely in the cold," with the U.S. exporting about $7.7 billion in pork. That amendment was rejected as well, though Rep. Jim Costas, D-Calif., agreed to hold a hearing on the issue.

Rep. Jim Hagedorn, R-Minn., also pushed an amendment to require USDA to issue the $17-per-head top-off payments promised to pork producers in the final days of the Trump administration. USDA still has not released those promised payments to producers.

"We should be in a position to say it's finally time to make these payments to our livestock producers," Hagedorn said.

Democrats also blocked GOP proposals to reduce food-aid benefits such as Supplemental Nutrition Assistance Program (SNAP) aid. Republicans said there are millions of jobs out there available for people, leading to speeches about the value of work. Democrats said the aid amounted to a $1.19 increase a day for most people, and a great many SNAP recipients do work, but their pay is so low they qualify for assistance.

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Chris Clayton