Tax reform could change the terrain for farmers
Source: Marc Heller, E&E News reporter • Posted: Tuesday, April 4, 2017
In a hearing rescheduled from March 15, the committee takes up taxes Wednesday.
Farm groups have been pressing for years to eliminate the estate tax, which would make transferring farms to younger generations less costly — although few farm estates reach the $5.49 million inflation-adjusted value that triggers the tax, policy analysts say.
But other parts of the tax code, including how farm equipment purchases are expensed and which accounting methods farmers use, affect farmers broadly and are likely to be part of the debate, farm groups said.
Accountants who work with farmers are pushing against a provision in the House Republican tax overhaul blueprint that would scale back the deduction for interest expenses. And while another provision would allow immediate expensing for purchases of depreciable assets, that benefit wouldn’t make up for the loss of the interest deduction, according to the American Farm Bureau Federation.
Lawmakers could consider making an exception for farm businesses, allowing them to continue taking a deduction for interest expenses, even if those expenses aren’t used as an offset against interest income, said Ryan Stroschein, federal affairs manager for K.Coe Isom, an agriculture consulting and accounting firm.
The discussion of tax changes comes as farm income is declining and agriculture groups are looking to Congress for help. The Republican leadership and President Trump have said they’d forge ahead with a tax revamp even after the collapse of a health law rewrite that was supposed to help pay for it. The last major tax rewrite was in 1986.
The Agriculture Committee has little say over tax policy, an issue that falls to the Ways and Means Committee in the House and the Finance Committee in the Senate.
In a statement, House Agriculture Chairman Mike Conaway (R-Texas) said, “The economics of farming and ranching make agricultural producers particularly sensitive to changes in the tax code. The panel will discuss how current tax provisions support a vibrant farm sector and offer suggestions for how to address agriculture’s unique challenges going forward.”
Schedule: The hearing is Wednesday, April 5, at 10 a.m. in 1300 Longworth.
Witnesses: TBA.