Farm co-ops praise Hoeven, Thune for Section 199 provision in tax bil
Sen. Hoeven’s office released the following statements:
National Council of Farmer Cooperatives President and CEO Chuck Conner: “Throughout the debate on tax reform, Sen. John Hoeven has worked tirelessly to ensure that farmers and their co-ops were treated fairly. In particular, the senator recognized early on that the elimination of the Section 199 deduction threatened to raise the tax burden of many producers and cooperatives.
“The provisions that he and Sen. John Thune were able to secure in the bill will, we believe, keep money in the pockets of family farmers across the country at a time when low commodity prices mean that every penny counts. We strongly support this bill and thank Sen. Hoeven for his leadership.”
American Crystal Sugar Company President and CEO Tom Astrup: Hoeven “fought effectively to craft a good alternative to Section 199, the Domestic Production Activity Deduction, which is eliminated under the tax bill.“
“We think the alternative will continue to provide important job creating incentives to rural America, which is extremely important given this challenging period for the farm economy.”
CHS Inc. President and CEO Jay Debertin: “The Section 199 deduction helped to create jobs and broaden the tax base in many rural communities and the loss of the deduction would have had impacts far beyond agriculture.”
“Sen. Hoeven has prevented that scenario through his efforts to make the new tax code work for co-ops and their members.”
Land O’Lakes President and CEO Chris Policinski: “Sen. Hoeven led the effort to ensure that eliminating the Section 199 deduction does not have the unintended consequence of raising taxes on producers during hard times across the countryside. The provisions included in the final package will offset the loss of this deduction, we believe, and help encourage job creation and growth across rural America.”
Farm leaders on Dec. 16 praised Sens. John Hoeven, R-N.D., and John Thune, R-S.D., for writing an amendment in the final tax bill to address the elimination of Section 199, which allowed co-operatives to pass a deduction for production and marketing expenses on to their members.
National Milk Producers Federation President Jim Mulhern said the final bill still repeals the Domestic Production Activities Deduction but said “the legislation allows cooperative members to claim a new 20 percent deduction on payments from a farmer cooperative.”
“Cooperatives would also be able to claim the 20 percent deduction on gross income less payments to patrons, limited to the greater of 50 percent of wages or 25 percent of wages plus 2.5 percent of the cooperative’s investment in property,” Mulhern said. “This favorable treatment for gross income will help minimize any potential increase in the tax burden on farmer-owned cooperatives.”
The highly technical amendment allows “a taxpayer other than a corporation” a deduction for any taxable year an amount equal to the sum of the lesser of the combined qualified business income amount of the taxpayer, or an amount equal to 20 percent of the excess of the taxable income of the taxpayer for the taxable year, over the sum of any net capital gain according to a certain definition. The Hoeven-Thune amendment was added to the conference report of the tax bill that the Republicans released late Friday. Republicans expect to vote on the bill in the House and Senate this week and send it to President Donald Trump for his signature before leaving for the Christmas and New Year’s holidays.
“We worked hard to ensure the final tax relief legislation provided certainty for cooperatives and treated them fairly,” Hoeven said in a news release.
“Cooperatives provide vital services for our communities and agriculture producers and fill an important role in our economy,” he said.
“I appreciate Sen. Thune, as well as our colleagues in the Senate and the House, for working with us to secure this important provision for our cooperatives. I look forward to advancing this and the rest of our tax relief legislation to help grow our economy and benefit middle-class Americans, workers, small businesses, farmers and ranchers.”
In his news release, Hoven said Rep Kevin Cramer, R-N.D., Rep. Kristi Noem, R-S.D., and House Agriculture Commitee Chairman Michael Conaway, R-Texas, worked to gather support for his amendment in the House.
Hoeven said Senate co-sponsors were Republican Sens. Cory Gardner of Colorado, John Boozman of Arkansas, Joni Ernst of Iowa, Roy Blunt of Missouri, James Risch of Idaho, Mike Rounds of South Dakota, Jerry Moran of Kansas, Tom Cotton of Texas and Steve Daines of Montana.
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