Senate passes tax extenders bill

Ag retailers may be anticipating the next two weeks, as cattle producers who have seen a dramatic increase in income this year, thanks to disaster payments and high cattle prices, take advantage of the last-minute tax break provided by the tax extenders bill. The bill reauthorizes the Section 179 expensing limit, raising it back to $500,000 from $25,000. Photo by Stephanie Eayrs.

The Senate last night passed the tax extenders bill, which contains equipment depreciation and renewable fuels tax breaks important to agriculture.

The vote was 76 to 16. The bill was already passed by the House and will now go to President Barack Obama for his signature.

Sen. Dianne Feinstein, D-Calif., immediately praised the action.

“With passage of this legislation comes much-needed certainty for taxpayers as they prepare to file their 2014 returns, and I believe American businesses and individuals are better off as a result.

“Whether it is supporting small businesses as they create jobs, farmers as they invest in essential equipment or homeowners and working families struggling to make ends meet, this legislation is positive for many areas of our economy,” Feinstein said.

“In particular, I am pleased to see the extension of the research tax credit, from which many innovative California firms benefit, as well as provisions that support investments already made in wind, biodiesel and other renewable energy sources — a critical aspect of combatting climate change.”

The National Cattlemen’s Beef Association called the bill’s passage “great news.”

Kent Bacus, director of legislative affairs for NCBA, said the extension of Section 179, a provision that provides a higher deduction level for some capital expenditures, such as machinery and equipment, and the extension of bonus depreciation are key for producers.

“Last year, producers were able to expense up to $500,000 on capital investments, but this year that was lowered to $25,000,” Bacus said. “For large equipment purchases and other capital investments, cattle producers need certainty in order to properly plan for their business.”

The Renewable Fuels Association called it a step on the right direction.

“Today’s tax extenders package is a step in the right direction,” said Bob Dinneen, president and CEO of the Renewable Fuels Association. “The cellulosic production tax credit will help bolster the emerging cellulosic ethanol industry as plants in Iowa and Kansas are now in production.

“The alternative-fuel vehicle refueling infrastructure tax credit will help expand E85 availability to consumers by assisting gasoline marketers in making the infrastructure investments necessary to enhance greater choice at the pump,” Dinneen said.

“These incentives can help to level the playing field in a tax code that is overwhelmingly tilted toward incumbent fuels and established oil extraction technologies. In fact, the International Energy Agency’s World Energy Outlook recently found that fossil fuels received an astounding $550 billion in subsidies worldwide last year,” he said.

“In the U.S. specifically, oil companies benefited from billions in accelerated depreciation, intangible drilling expenses, and countless other tax breaks embedded permanently in the tax code. This drastic imbalance is why fundamental tax reform is so necessary.

“Comprehensive tax reform is also necessary, because today’s legislation is a short-term solution to a long-term problem,” Dinneen added. “Once signed into law, the tax credits will be retroactively applied to 2014 and are only applicable until the end of the month. This once again forces investors and cellulosic ethanol producers to hope for the best but prepare for the worst.

“Today, Congress should be commended for helping businesses and consumers alike. But next year is a whole new ball game, and in order to balance the scales and make future tax incentives truly helpful, Congress must take a good hard look at overarching tax reform legislation,” Dinneen said.

The Waterways Council Inc. applauded the Senate for including the barge diesel fuel user fee.

The provision was a part of tax extenders legislation that was combined with the “Achieving a Better Life Experience (ABLE)” Act that establishes tax-favored savings accounts for individuals with disabilities. The ABLE Act that included the provision to increase the user fee by 9 cents passed the House on Dec. 3 by a vote of 404-17.

The user fee – currently 20 cents per gallon of fuel used while operating on the inland system – will be increased to 29 cents per gallon, effective April 1, 2015.

Deposited into the Inland Waterways Trust Fund (IWTF), this amount is matched by General Treasury Funds and is dedicated to new construction and major rehabilitation of the inland system.

The American Soybean Association praised the farm equipment, biofuels and waterways provisions.

–The Hagstrom Report