Tax Reform Advances

Farm Groups Show Mixed Reactions as House Passes Tax Bill, Senate Bill Moves Ahead

The House tax-overhaul bill passed by a vote of 227-205 on Thursday, with 13 Republicans joining all Democrats in voting against it. (DTN photo illustration by Nick Scalise)

WASHINGTON (DTN) -- The Senate Finance Committee finished a markup of its tax-overhaul bill on Thursday, paving the way for it to go to the Senate floor after the Thanksgiving break. The House passed its tax bill on Thursday as well.

The House bill passed by a vote of 227-205, with 13 Republicans joining all Democrats in voting against it.

The Senate Finance Committee approved its bill at the end of a four-day markup. The committee advanced the bill after a contentious report released by the Joint Committee on Taxation that the Senate bill would eventually raise taxes on people making under $30,000 within the next four years, then within a decade, would raise taxes on most families making $75,000 or less. At the same time, people making above $100,000 would continue to pay lower taxes.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, refuted those claims in advancing the bill.

"By nearly doubling the standard deduction, lowering tax rates, and doubling the child tax credit, we have made good on our promise to deliver a bill that will improve the lives of average Americans who have been hit by nearly a decade of sluggish economic growth," Hatch said. "Bringing our outdated tax structure into the 21st century will help level the playing field for businesses -- both small and large -- and ensure we can keep more jobs and more investment here at home."

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., voted for the bill and praised the provisions that he said would provide tax relief for middle class families.

"I am also proud of the pro-growth provisions I secured in the bill for farmers and ranchers, especially during this tough economy," Roberts added, but he did not provide details.

But Sen. Tom Carper, D-Del., said, "This evening, Republicans on the Senate Finance Committee approved a bill to repeal a critical part of the Affordable Care Act, and blow a hole of at least $1.5 trillion in our federal deficit over the next 10 years in order to give millions of dollars in tax breaks to the wealthiest Americans. It's shocking. In fact, it's almost unbelievable."


Reaction from agricultural groups to passage of the House bill was mixed, especially because of the removal of the Section 199 Domestic Production Activities Deduction.

Chuck Conner, president of the National Council of Farmer Cooperatives, continues to argue that elimination of the deduction would reduce the flow of $2 billion in economic value that "will flow out of rural America at a time when farmers and their local communities are struggling through the fourth year of stagnant prices," Conner said. He added, "As the Senate Finance Committee continues to mark up its own tax reform package, we urge them to ensure that producers and their co-ops will not see their tax burdens increased while other sectors, from banking to technology, enjoy lower tax bills."

Other groups have taken up the same call. The Almond Alliance of California issued an alert to oppose eliminating the Section 199 deduction, as well as the repeal of state and local tax deductions. The almond growers also expressed concern about elimination of a tax deduction "interest charge of domestic international sales corporation," known as IC-DISC, that is often available to manufacturers and producers that export.

"With farmers and producers experiencing many challenges, this is certainly not the time for Congress to take any action that would raise taxes on those producing our food," the Almond Alliance stated. "The impact of eliminating any one of these deductions would be a burden -- but with all three combined -- it will be devastating to family farms."

Still, leadership at the American Farm Bureau Federation praised passage of the House bill. Zippy Duvall, president of AFBF, said the House passage, "puts us one step closer to a tax code that works for all farmers and ranchers. Lower rates combined with the preservation of small business expensing, like-kind exchanges and the business deduction for state and local taxes are just a few of the things we are pleased to see in this legislation. We look forward to working with the Senate to build on this success in the coming weeks."

National Cattlemen's Beef Association President Craig Uden, a Nebraska cattle producer who had campaigned for provisions that will double the exemption for the estate tax immediately and end it in five years, said the bill is "a step in the right direction" but still creates "undue and unfair burdens for certain segments of our industry."

Uden praised the preservation of the step-up in basis upon inheritance and provisions to fully expense the cost of new investments, increase Section 179 small-business expensing limits, and expand cash accounting.

But Uden noted that the bill "would also significantly limit the ability of some businesses from deducting their interest expenses. This could be a big problem for some members of the cattle-production business."

The National Farmers Union said the bill would increase the federal debt and jeopardize farm program funding.

An opponent of regressive taxation, increased federal debt, and legislation that jeopardizes farm program funding, NFU urged House members to vote against the legislation and scored the vote.

"NFU is alarmed by the House's decision to pass highly flawed tax reform legislation that has disastrous implications for American family farmers and ranchers," said NFU Vice President of Public Policy and Communications Rob Larew.

"The policies put forth by this bill would increase the tax burden on family farmers and the middle class, and they add a massive $1.5 trillion to our national deficit. On top of that, they potentially put funding for vital farm safety net programs on the chopping block and jeopardize passage of the farm bill."

House Agriculture Committee Chairman Michael Conaway, R-Texas, did not comment on the bill, but House Agriculture ranking member Collin Peterson, D-Minn., said he supports making the corporate tax rate more competitive and simplifying the tax system. But Peterson also noted the bill would add at least $1.5 trillion to the deficit over the next decade.

Corporate rates can be reduced without sticking future generations with this added debt," Peterson said. "I cannot in good conscience support a bill that drives up our deficit and will increase taxes on thousands of Minnesotans."

The House bill eliminates provisions that help people with large medical bills, as well as those with high student loan debt. Peterson said this is not the way to pay for a corporate tax cut. He also said the bill would complicate taxes for people who use certain pass-through business structures.

"It will also create a more complicated system for pass-through entities that I believe will be abused and spawn tax shelter businesses," Peterson said. "We can lower the corporate tax rate, but shouldn't do it at the expense of individual deductions, or the elimination of Sec. 199 for co-ops, or the wind power credit."

Chris Clayton can be reached at

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