News

Ag tax reform changes: Devil is in the details

Published:

Tax code was the topic up for discussion in the House Agriculture Committee Wednesday. Members heard from the House Committee on Ways and Means, including Rep. Kristi Noem (SD-at large) and Rep. Lynn Jenkins (KS-2), and a diverse panel of witnesses including agricultural and tax professionals.

Pat Wolff, senior director of congressional relations for the American Farm Bureau Federation, addressed agriculture’s need for sweeping tax reform in her testimony.

“Running a farm or ranch business is challenging under the best of circumstances,” Wolff said. “Farmers and ranchers need a tax code that recognizes the unique financial challenges that impact them.”

Wolff urged Congress to create and retain policies that support high-risk, capital-intensive businesses like farms and ranches. Farm Bureau supports many of the provisions in the House’s proposed blueprint for reform, including reduced income tax rates, reduced capital gains taxes, immediate business expensing, and estate tax repeal. But, Wolff explained, the plan can be improved by reinstating benefits like the deduction for business interest expense and guaranteeing the continuation of stepped-up basis, cash accounting, and like-kind exchanges.

“Farming and ranching is a cyclical business where a period of prosperity can be followed by one or more years of low prices, poor yields or even weather disaster,” Wolff said. Farmers, she added, depend on flexibility and benefits in the tax code that allow them to recover capital investments and put their money back to work on their farms quickly.

In K·Coe Isom’s Doug Claussen’s testimony, he pointed out to the committee that the forecast for farming net income in 2016 is half of what it was in 2013. And that adding the ability to carry back operating losses for five years, as opposed to the current two years, is critical to helping farmers deal with the volatility of the markets.

“Tax reform has broad implications across all areas of U.S. agriculture,” Claussen said. “We were honored to be invited to speak to the interests of producers and agribusinesses who strive to raise food and families profitably while adjusting to potential changes in the tax code.”

“Both the ranking member and I are CPAs, and many of our colleagues in Congress are small business owners in their own right,” said Agriculture Committee Chairman K. Michael Conaway. “Few business sectors in America are subject to as many unknowns as farming and ranching. With the upcoming potential for tax reform, it is important to highlight the unique challenges of the agricultural industry and explore opportunities within the tax code to better support a vibrant farm sector.

“As with tax reform changes from years past, the devil is in the details. Providing for a simpler, fairer tax code means that many parts of the tax code may have to change, but these individual proposals cannot be evaluated in a vacuum. I look forward to working with Chairman Brady and his colleagues on the Ways and Means Committee as they craft a tax reform package, and I urge all of my colleagues to reserve judgment until they’ve had an opportunity to evaluate a complete package.”

Any views or opinions expressed in this article are those of the author and do not reflect those of AGDAILY. Comments on this article reflect the sole opinions of their writers.
Previous Article Next Page