Tax reform blueprint is revealed
— Death tax repeal included
A tax reform plan was released on Sept. 27 that would cut taxes for individuals and businesses. An item of particular interest to agricultural producers is a proposal to eliminate the death tax.
A statement from the White House announcing the “Unified Framework for Fixing Our Broken Tax Code” said the Trump administration, the House Committee on Ways and Means, and the Senate Committee on Finance developed the plan to achieve pro-American, fiscally responsible tax reform.
While many details were not included in the nine-page document, it was described as a template or blueprint for lawmakers as they write tax legislation.
The National Cattlemen’s Beef Association (NCBA) started an online media campaign in September to promote comprehensive tax reform and expressed pleasure when the blueprint was announced. NCBA President Craig Uden said, “Our nation’s cattle producers are very pleased that President Trump and Republican leaders in Congress have maintained their long-standing commitment to American agriculture by including a full repeal of the onerous death tax in the Unified Framework for Fixing Our Broken Tax Code. We look forward to working with the administration and lawmakers on Capitol Hill as pen meets paper on tax legislation, and will continue to demonstrate how the death tax and its associated costs adversely affect familyowned operations and the rural communities they support.
Uden added, “Also, current provisions in the tax code that help livestock producers maintain economically viable businesses and support the success of future generations of farmers and ranchers must be preserved. Steppedup basis, cash accounting, like-kind exchanges, cost recovery, and the deductibility of interest payments are just a handful of the provisions that allow agricultural producers to survive despite the many challenges we face, from market volatility and fluctuating input prices to droughts, wildfires, and floods to the challenge of generational transfers. We’ll closely monitor these provisions as more details on legislative language become available, and intend to fight tooth and nail for a tax code that supports America’s beef producers.”
Danielle Beck, NCBA director of government affairs, commented on the importance of death tax repeal, telling WLJ, “Ag is fundamentally different from most other business entities in that they are cash poor and asset rich. The biggest challenge when it comes to transferring one business to the next generation is the transfer of all of these assets, particularly the land.
That land doesn’t really translate into being cash in the bank. So, when faced with the death tax a number of farms and ranches have to sell off portions of their operation just to pay the IRS.”
While keeping in mind the announced plan is just a blueprint, Ruby Ward, professor of applied economics at Utah State University, said one feature that might be of interest to farmers and ranchers are changes to expensing business purchases.
“The ability to expense all capital expenses, so that would mean, rather than depreciating something over different tax years, you would make them the year you bought them and that would affect agriculture. You could deduct the full amount the year you made the investment.”
The plan would also impact individuals with a provision that would consolidate tax brackets from seven to three of 12, 25 and 35 percent. Additionally, deductions for individuals and married couples would be doubled to $12,000 and $24,000 respectively.
Corporations would also see changes in top rate tax reductions from 35 to 20 percent, among other things.
Director of the National Economic Council Gary Cohn commented, “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.” He continued, “The administration and Congress have worked together to develop this unified framework for tax reform, which will grow our economy, create jobs, and provide relief for working families. This framework will deliver on the president’s promise to end the rigged system that has kept our workers and businesses down for too long.”
Additional information on the plan is available at https://www.whitehouse.gov/omb/budget.
Congress has set a goal to adopt tax reform legislation before the end of the year but must first write the language and pass a budget.
Both the House and Senate are expected to consider their respective budget resolutions this week. — WLJ