Congress faces funding deadline, DACA, ag tax problem
January 17, 2018
Following the Martin Luther King Jr. holiday, congress returned to Washington this week facing a Jan. 19 deadline to pass a bill to keep the government running, as well as pressure to extend the program for immigrant youth who do not have legal status, and to fix the tax bill provision that would make it more advantageous to farmers to sell grain to co-ops rather than for-profit grain trading companies.
The current continuing budget resolution expires Jan. 19, but it is unclear whether congress will come up with a bill by then to keep the government open. Democrats are under intense pressure to insist on a resolution to the Deferred Action for Childhood Arrivals program known as DACA.
Meanwhile, Agriculture Undersecretary for Marketing and Regulatory Services Greg Ibach and the leaders of the National Council of Farmer Cooperatives and the National Grain and Feed Association said they are determined to find a solution to the problems Section 199A tax provisions.
Ibach, who is in charge of USDA's regulation and promotion of co-ops, said in a statement, "The aim of the Tax Cuts and Jobs Act was to spur economic growth across the entire American economy, including in the agricultural sector."
"While the goal was to preserve benefits in Section 199A for cooperatives and their patrons, the unintended consequences of the current language disadvantage the independent operators in the same industry," Ibach said.
"The federal tax code should not pick winners and losers in the marketplace. We applaud congress for acknowledging and moving to correct the disparity, and our expectation is that a solution is forthcoming. USDA stands ready to assist in any way necessary."
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Under the provision in the tax bill, farmers who sell products to co-ops could take a deduction for 20 percent of sales but if they sell to for-profit companies they can take a deduction for only 20 percent of profits. The measure was put in the bill to replace a provision that allowed co-ops to pass through to members a deduction for production and marketing expenses,
On Jan. 19, NCFC President and CEO Chuck Conner and NGFA President Randy Gordon said in a joint statement, "We are aware of questions and concerns raised about the potential marketplace effects of the new section 199A of the Tax Cuts and Jobs Act as it relates to producers and agribusinesses."
"Congress's intent in including this provision was to replicate the tax treatment previously available to co-op farmer-members, consistent with the bill's overarching goal of creating jobs and economic growth including in rural America," they said.
"We are working intensively with stakeholders, including cooperatives, non-cooperative-owned agribusinesses and Senate offices, including Sens. (John) Hoeven, (John])Thune and (Pat) Roberts. The goal of these discussions is to arrive at an equitable solution that preserves the benefits that cooperatives and their farmer patrons previously enjoyed under Section 199 of the tax code, while addressing any unforeseen impacts on producers' marketing decisions.
"NCFC, NGFA and our stakeholders are committed to reaching a solution in a thoughtful and expeditious manner, and to working with Congress to address this issue promptly."
But it is unclear just how seriously congress will take the problem. Treasury Secretary Steve Mnuchin said last week he did not see any big problems with the tax bill that need resolution.
Democrats in the House and Senate voted against the tax bill so getting them to work on a solution to a bill they did not support may be a challenge.