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Farm groups mull House, Senate tax cut proposals

By MICHELE F. MIHALJEVICH

 

FORT WAYNE, Ind. — Agriculture-related organizations, politicians and voters have weighed in on U.S. House and Senate Republican plans to cut taxes.

A Senate tax cut measure was expected to be formally introduced this week while the House passed its $1.5 trillion legislation Nov. 16. If and when the Senate passes a bill, the next step would be a conference committee where legislators would try to iron out differences between the two versions. President Donald Trump has said he would like to see legislation on his desk by Christmas.

The House bill contains provisions farmers and ranchers want to see, said Bob White, director of national government relations for the Indiana Farm Bureau. “At first blush, the House plan looks pretty good for farmers,” he explained. “They got rid of the estate tax, kept Section 179 expensing. There is a question about what people might do if they get extra money from the tax bill. Do they pay down debt or do they go out and spend it? The House version believes you’re going to go out and spend it.

“Some components will have to be reauthorized every few years,” White continued. “When those things aren’t made permanent, it can be difficult for a small business owner or farmer to know what’s going on down the road.”

Under the House bill – the Tax Cuts and Jobs Act – the estate tax would be eliminated in six years. Until then, it doubles the amount of estate property exempt from the tax. The current exemption rates are $5.49 million per person and $10.98 million per couple.

The deduction limit for some business expenses under Section 179 of the federal tax code would increase from $500,000 to $5 million. The provision is temporary and would end in five years.

The corporate income tax rate would fall from 35 to 20 percent. The number of individual tax brackets would drop from seven to five – zero, 12 percent, 25 percent, 35 percent and 39.6 percent.

Standard deductions would increase to $12,000 for single individuals, up from $6,350. The deduction for married couples would go up from $12,700 to $24,000.

The Senate’s proposal does raise the amount of property exempt from estate tax but doesn’t eliminate it. It also increases the deduction limit for small businesses under Section 179. It keeps the reduction in the corporate income tax rate but would delay it until 2019. The plan would keep the number of individual tax brackets at seven, but lower the top rate to 38.5 percent.

The Senate plan also includes a repeal of the Affordable Care Act (ACA) mandate that requires most Americans to have health insurance. The provision isn’t in the House bill.

“There will be differences (between the plans) to work out,” White said. “Who knows if the Senate has enough votes to pass it. When they added the repeal of the ACA penalty, that may have blown it up.”

It’s important for legislators to find a balance among those struggling financially, big corporations and those with higher incomes, said Jordan Rasmussen, policy associate with the Center for Rural Affairs.

“Trying to find the pros and cons (of the tax plans) is difficult,” she noted. “Saying this is great or this isn’t, isn’t easy to do. The piece that is most alarming is that they’re looking to add $1.5 trillion to the deficit. There’s been nothing said about what the ‘pay fors’ will be. Medicare, Medicaid and SNAP (Supplemental Nutrition Assistance Program), they’re so critical to rural America. There are economic concerns and poverty in parts of rural America.”

Rob Larew, senior vice president of public policy and communications for the National Farmers Union, said the organization was “alarmed by the House’s decision to pass highly flawed tax reform legislation that has disastrous implications for American family farmers and ranchers. 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 debt. We urge the Senate to reconsider their current legislation, as it has comparable implications for family farm agriculture.”

Farm World reached out to Indiana senators Joe Donnelly, a Democrat, and Todd Young, a Republican. Donnelly’s office declined an interview request but did provide the following statement: “Tax reform should create jobs, protect jobs, invest in American workers and benefit middle class families. The vast majority of Hoosier farms function as small businesses and it’s critical that they can compete in the global economy. I will carefully review the Senate proposal and continue to engage my colleagues and the White House on behalf of Hoosiers as the Senate works on tax reform.”

Young’s office didn’t return a message seeking comment.

Sen. Dick Durbin (D-Ill.) said as a result of the House bill, one-third of Illinois families will face double taxation for their property, income and sales taxes for the first time. “This House bill gives guaranteed tax giveaways to the wealthy and temporary tax relief to some middle-class families,” he said. “Rushing through their partisan bill is a guarantee mistakes will be included, which hurt many hard-working families in Illinois.”

The Senate plan is geared toward providing middle-class tax relief to help Ohio families dealing with higher expenses and flat wages, said Sen. Rob Portman (R-Ohio). “Our plan will help make American companies more competitive so we can create more jobs and increase wages in the United States rather than sending them overseas,” he noted. “Our plan will also level the playing field internationally so we can bring back jobs and investment.”

A poll released Nov. 15 by Quinnipiac University found 52 percent of American voters disapproved of the Republican tax cut plans, while 25 percent approved. Sixty one percent of voters said the wealthy would be the primary beneficiaries of the plans; 24 percent said the middle class and 6 percent said low-income Americans. The poll was conducted Nov. 7-13.

11/28/2017