House passes budget as farmers express tax reform concerns
October 27, 2017
The House today passed the fiscal year 2018 budget resolution already passed by the Senate, setting the stage for the Republicans to write a tax reform bill.
The budget resolution will allow the Senate to consider the bill without needing 60 votes to end debate.
The vote was 216-212. Twenty Republicans joined all 192 Democrats in voting against the resolution, giving the Republican leadership a margin of only four votes. Five members did not vote.
The White House praised the action. A statement from Press Secretary Sarah Sanders said "This resolution sets the stage for Congress to put America first by providing economic relief for the American people in the form of tax cuts and tax reform."
“Through tax reform, we can put more money in the pockets of hardworking Americans, provide much-needed tax relief and create more jobs. By passing this budget, I am pleased we can begin the process of advancing tax reform and ultimately get legislation to the president’s desk for his signature.” Diane Black, R-Tenn., Chairwoman of the House Budget Committee
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"President Trump has always made cutting taxes for hard-working American families, creating more jobs for American workers, and simplifying the rigged and burdensome tax code a priority, and he looks forward to further cooperation with Congress to advance the Administration's pro-growth and pro-jobs agenda."
Some Republicans expressed reservations that the bill may increase the national debt and that tax reform may end the deduction for state and local taxes.
But House Budget Committee Chairwoman Diane Black, R-Tenn., said today, "I am proud that Congress agreed to a budget that reflects the shared priorities of both chambers and represents the golden key to unlock historic tax reform."
"Through tax reform, we can put more money in the pockets of hardworking Americans, provide much-needed tax relief and create more jobs," Black said. "By passing this budget, I am pleased we can begin the process of advancing tax reform and ultimately get legislation to the president's desk for his signature."
But a spokesman for the Democratic Congressional Campaign Committee said, "With this budget, House Republicans are officially on the record supporting a middle-class tax increase — something they'll be forced to defend repeatedly in the midterms."
"Speaker [Paul] Ryan's [R-Wis.] foolish decision to force his most vulnerable members to walk the plank on a toxic tax increase for a huge group of hardworking Americans has further imperiled his majority."
Farm leaders have expressed enthusiasm for tax reform, but are beginning to have reservations about current tax breaks that farmers might lose in the Republican attempt to reduce the corporate income tax rate.
This week the National Council of Farmer Cooperatives expressed strong reservations about the provision in the Republican document "Unified Framework for Fixing our Broken Tax Code" that would eliminate the Section 199 deduction that is passed down by farmer co-ops to their member-owners.
If the provision is passed, NCFC said, "money will flow from the pockets of farmers and rural communities to investment bankers on Wall Street and venture capitalists in Silicon Valley."
Section 199, also known as the Domestic Production Activities Deduction (DPAD), was enacted as part of the American Jobs Creation Act of 2004 and applies to proceeds from agricultural products that are manufactured, produced, grown, or extracted by farmer cooperatives, or that are marketed through co-ops, NCFC explained.
The great majority of cooperatives pass the benefit through directly to their farmer members, and it is estimated that the deduction returns nearly $2 billion annually to rural areas in all 50 states.
"Farmer co-ops have consistently supported tax reform and related policies that support economic growth in rural America as well as the broader economy," said NCFC President and CEO Chuck Conner.
"The elimination of the Section 199 deduction for agriculture increases the tax burden on farmers and their co-ops and obviously runs counter to that goal," Conner said. "In a time of continued low commodity prices, those hardworking Americans who grow our food can ill afford for Congress to pass a law that will raise their taxes."
"As both the House Ways & Means Committee and the Senate Finance Committee begin considering detailed tax reform packages, they must preserve the Section 199 deduction for agriculture and recognize that lower rates by themselves will not offset a loss of the deduction," Conner continued.
"It would be a strange irony indeed if a Republican Congress and a Republican president pass a law that increases taxes on America's farmers."
Patricia Wolff, the tax adviser at the American Farm Bureau Federation, has spoken repeatedly of farmers' concerns about the tax bill. This week she told Financial Times that farmers want to hold on to the interest deduction because they rely heavily on debt to buy their land, finance equipment and purchase seeds and other raw materials.
–The Hagstrom Report