Tax reform a priority for farmers
As summer draws to a close on Capitol Hill, farmers are pleased that both Republican Congressional leaders and administration officials are asserting that tax reform will be the first order of business when Congress returns to Washington.
“Fixing our tax system now is crucial to creating economic opportunities for farmers, ranchers and other family-owned businesses,” commented Zippy Duvall, president of the American Farm Bureau Federation. “This is especially important as farmers continue to face down tough economic challenges” related to low commodity prices.
The Farm Bureau leader explained that farmers are seeking several tax code changes. Those include reducing combined income and self-employment tax rates to account for any deductions or credits lost; cost-recovery tools that allow businesses to deduct expenses when they are incurred; and the continuation of the cash accounting method, as well as deductions for state and local taxes.
“We definitely need to keep Section 179 of the tax code, which allows a farmer to expense farm equipment in the first year it is purchased,” commented Craig Giese, a CPA with the firm of Dehnert, Clarke & Co., P.C. and a Lancaster County Farm Bureau member and grain grower. “That’s currently allowed, but anytime Congress rewrites the tax code that could change.
“That’s a really important tool with such large capital investments,” he added. “These days a new combine can cost between $400,000 and $500,000. Right now you could use all of that in the first tax year if you needed to offset some other income.
”The AFBF also is calling for a repeal of all federal estate taxes, along with a reduction of capital gains taxes. Giese noted that a friendly tax code is one of the few ways Congress can continue to support family farmers.
“Farm safety net programs went away in previous budget cuts,” he said. “Now that commodity prices are much lower than back in 2012, farmers are all feeling the pinch of not having those farm programs.”
Giese added that “whether it’s through the tax code or crop insurance, farmers need a stronger safety net. When they were talking about changing crop insurance, that scared the living daylights out of me. Without crop insurance, you are literally gambling hundreds of thousands of dollars to put a crop in the ground each year.”
For more details on tax reform for farmers and small businesses, visit fb.org/advocacy/tax-reform-needed-now/.