Impact of COVID-19 on Agriculture

Agriculture’s Time for Tax Reform

Viewpoints / Beyond the Fencerows November 15, 2017

Credit: CC BY-SA 2.0 // Ken Teegardin 

By Zippy Duvall

Congress is debating the first major tax reform package in more than 30 years. This is no small task, and if the right provisions are set in place, an updated federal tax code could yield real economic growth across rural America.

We’ve been busy reviewing the tax plan details, looking to the bills coming out of committee, and keeping our eyes set on our primary goal: reducing the tax burden for America’s farms and ranches. We talk a lot about how farms and ranches face unique challenges, and that fact becomes all the more clear during tax season. For example, 94 percent of all farms are not incorporated as large businesses—which goes to show how much smaller our stack of income receipts is compared to most businesses. We face the balancing act every season as we manage high input costs against an unpredictable cash flow to keep our businesses running and, we hope, turn a profit. It takes a lot of faith and careful business planning— some years even the best plans are wiped out by Mother Nature or a downturned economy. 

Common-sense tax reform must continue to include provisions, such as like-kind exchanges and stepped-up basis, that help farmers and ranchers weather the ups and downs.

Farmers know better than most how to stretch every dollar, and that’s why we depend on tax provisions that let us deduct legitimate business expenses—from regular expenses like feed, seed and fuel to major expenses like equipment and interest on loans. We also rely on accounting practices such as cash accounting, which helps us deal with narrow margins in an unpredictable industry. Common-sense tax reform must continue to include provisions, such as like-kind exchanges and stepped-up basis, that help farmers and ranchers weather the ups and downs. Otherwise, farmers will face a tax increase without the deductions they count on.

Any tax boost will be short-lived on the farm if farmers can’t pass on their businesses from one generation to the next. For too long the estate tax has hung over the heads of farmers and ranchers. It threatens the future of our farms and forces us to find workarounds to keep businesses in the family and preserve our nation’s agriculture industry.

Land is at the center of all of this. It’s our greatest asset, but it can also be the hardest to come by as property values increase. Younger generations who would otherwise return to the farm are hard pressed to hold on to that farm property if they can’t afford to pay the estate tax. Farm Bureau has been working for decades now to see the estate tax put to death once and for all. Rural farm families shouldn’t be forced to spend their limited resources protecting themselves from a tax that was meant for the wealthy.

Lawmakers need to hear from you as tax reform legislation comes up for a vote. We are long overdue for a federal tax code that gives us the freedom to reinvest in our businesses and keeps agriculture moving forward. We must be certain that Congress’ action on tax reform does just that.

Many of you have heard me speak about this being “our time,” meaning agriculture’s time to make progress on issues we’ve been working on for years. Tax reform is definitely on that list of issues, and with a Congress and White House that are working to create a tax code that rewards hard work and helps farmers and ranchers keep more of their hard-earned money on the farm, it is our time. To ensure we capitalize on this short window of opportunity—our time—we must engage with our senators and representatives in Congress.  

Zippy Duvall

Vincent “Zippy” Duvall, a poultry, cattle and hay producer from Greene County, Georgia, is the 12th president of the American Farm Bureau Federation.

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