Smith: The tax reform plan coming out of Congress makes major changes to the tax code. Pat Wolff, AFBF senior director of congressional relations, says Farm Bureau is reviewing the plan to ensure the effective tax rate lessens the tax burden for America’s farmers and ranchers.
Wolff: Right now, farms pay taxes under the individual tax code, which has rates as high as 39 percent. There’s going to be a new special rate just for businesses that will cap out at 25 percent. We’re studying it now. We don’t know if it will be good or bad for farmers in the end because farmers are being asked to give up a lot of deductions that they have for that new rate.
Smith: Wolff calls it a bold proposal that she expects to move through Congress quickly. The bill would extend provisions critical to agriculture, in addition to repealing the estate tax—a reform Farm Bureau has long called for.
Wolff: Now it doesn’t do that right away, that’s six years out, but it does double the exemptions starting next year, and that will help a lot of farmers and ranchers. The bill continues the deduction for business interest, that’s something that was under attack, and it allows farmers to continue to use cash accounting. This is important because if farmers and ranchers don’t have these tools, they could end up with a tax increase.
Smith: Wolff says tax reform done right means that farmers and ranchers get to keep more of their hard-earned money. The tax reform plan is on a fast-track for passage. Wolff says the big question is whether the new tax code will result in lower taxes for farmers and ranchers.
Wolff: The big question of the day is will the end result be a tax cut for farmers and ranchers. Yes, there’s a new lower business rate for farmers being proposed but there are a lot of changes to the tax deductions and credits that farmers use. In the end, the bill should only be passed into law if it’s a benefit for farmers and ranchers.
Smith: Chad Smith, Washington.