Clements: Last week, the House Ways and Means Committee held its second hearing on the proposed border adjustability tax. American Farm Bureau Federation tax specialist Pat Wolff explains how the tax would change the way the U.S. taxes corporations.
Wolff: Instead of taxing a corporation where it produces the product, the tax would be levied where the corporation sells the product. This means that a tractor manufactured in the U.S. but sold overseas would have a 20 percent tax break. Farm Bureau, while monitoring the situation, has not taken a position.
Clements: Wolff says the tax offers pros and cons for U.S. agriculture.
Wolff: This would make all of the products that agriculture sends overseas 20 percent less expensive. That is a big plus for any commodity that’s highly exported. The flipside of that means that there would be a 20 percent tax imposed on imports. For agriculture, that means a 20 percent tax increase on almost all fertilizers, a lot of chemicals that are petroleum based in fuel costs.
Clements: She says farmers and ranchers need to engage lawmakers about the benefits and impacts the proposed tax would have on their businesses.
Wolff: Farmers and ranchers need to understand that this is a serious proposal, and they should speak to their representatives and senators about their industry. They need to take a look at how much of their product goes overseas, and compare the benefit to exported sales with the additional costs on their inputs.
Clements: Micheal Clements, Washington.
Communications Assistant, AFBF