The House Agriculture Committee held a hearing this week to examine tax issues that are of specific interest and impact to agriculture. The hearing provided a forum on the unique nature of family farm operations and the tax provisions that impact them most directly. Discussion focused on many of the tax issues identified in ASA’s policy resolutions and 2017 priorities, such as cash accounting, expensing, interest deductions, estate tax and stepped-up basis, and like-kind exchanges. Testifying at the hearing were representatives from American Farm Bureau Federation, KCoe Isom LLP, Clifton Larson Allen LLP and the U.S. Department of Agriculture (USDA) Economic Research Service.  You can access their testimony through the Agriculture Committee website.

Several Committee members indicated their strong opposition to the elimination of interest deductions for businesses, especially farms, citing the fact that agricultural operations are debt-financed and incur significant interest expenses without off-setting interest income opportunities. One expert testifying at the hearing recommended a targeted exemption for farm operations if the proposal to eliminate the interest deduction goes forward.

The issue of the border adjustability tax proposal was also discussed at the hearing, with the consensus view that the impact to agriculture is unclear. The American Farm Bureau Federation indicated that they have not taken a position because there are both positives and negatives to border adjustment taxes. As examples, they cited a positive impact for the competiveness of U.S exports in foreign markets, while a negative impact could be felt by farmers since they rely on imported supplies such as fertilizer.