Impacts of Proposed Tax Reform on Agriculture
September 28, 2017
Nashville, TN (RFD-TV) While in Indiana, President Trump announced a proposed framework for tax reform, setting in motion what may prove to be one of the first major changes to the tax code in decades.
The President laid out four principles which make up the main platform of his proposed tax reform, stating, “First, make the tax code simple, fair and easy to understand. Second, give American workers a pay raise by allowing them to keep more of their hard-earned paychecks. Third, make America the jobs magnet of the world by leveling the playing field for American businesses and workers. Finally, bring back trillions of dollars that are currently kept offshore to reinvest in the American economy.”
Agriculturalists are looking into this proposed framework and discussing how these changes will affect producers. Key areas of interest in the proposals include: narrowing the number of tax brackets from seven to three, lowering the corporate tax rate while capping small business tax rates at 25%, and ending the estate tax.
Farmers are especially excited about a potential end to the estate tax. Iowa Senator Chuck Grassley responded to the President’s proposals, “For farmers and family businesses, the framework would repeal the estate tax. That’s a matter of fairness to those who have lived frugally and invested every penny in their land or business. They shouldn’t be penalized for that.”
However, many are aware that not all changes will necessarily be beneficial for the farmer and rancher. Danielle Beck, a representative of the National Cattlemen’s Beef Association, explained, “Simplification of tax codes sound nice in theory, but in practical application, it could be bad. Right now, the effective tax rate is quite low for farmers, because of cash accounting, like-kind exchanges, and the step up in basis. If Congress moves to lower the rates – and to do that, eliminates a lot of these provisions – our farmers and ranchers could end up paying more.”
But while questions remain, many, both within the agricultural industry and in other areas, see this as a big opportunity. Director of the National Economic Council, Gary Cohn said, “We have a once-in-a-generation opportunity to give American workers and businesses the level playing field they deserve and make us competitive once again on the world stage.”
A one-page summary of the proposed tax framework has been provided by the US Treasury.
Watch the video above for a more in-depth explanation of how these changes could affect the agricultural industry.
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