After months of meeting regularly, the leaders of the House Ways and Means Committee and Senate Finance Committee have committed to developing and drafting legislation that will result in what they say is the first comprehensive tax reform in a generation.
The White House and Treasury have met with over 200 members of the House and Senate and hundreds of grassroots and business groups to talk and listen to ideas about tax reform. A coalition of agricultural groups met at the White House July 25 with Treasury Secretary Steven Mnuchin.
Congressional leaders and administration officials have released a statement on tax reform that addresses many issues of importance to America’s farm and ranch families. These reforms are focused on lowering tax rates to help the middle class get ahead, allowing unprecedented capital expensing for businesses, creating a system that brings back jobs and profits trapped overseas, and locking these reforms in for the long-term.
One of the biggest reliefs within the statement released on tax reform was the abandonment of the border adjustment tax (BAT) which many in agriculture feared would make agricultural products uncompetitive or result in backlash against U.S. agriculture.
“While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform,” the joint statement said.
The statement said the expectation is for legislation from the two tax-writing committees would move through the committees this fall, under regular order, followed by consideration on the House and Senate floors. They also said their hope is to find bipartisan support.
Following the statement, Zippy Duvall, president of the American Farm Bureau Federation, said, “Fixing our tax system now is crucial to creating economic opportunities for farmers, ranchers and other family-owned businesses. This is especially important as farmers continue to face down tough economic challenges.”
The priorities communicated by agricultural groups included maintaining cash accounting, income averaging, business interest deductions and Like-Kind exchanges for farmers. The groups also expressed support for immediate expensing and repeal of estate taxes while maintaining stepped-up basis.
"We're thankful that Secretary Mnuchin took the time to listen to our priorities, and we look forward to working with him and his team as comprehensive tax-reform legislation is drafted and makes its way through Congress," National Cattlemen’s Beef Association (NCBA) Director of Government Affairs Danielle Beck said after the meeting. "He reiterated his support for many of our priorities, including a full and permanent repeal of the death tax."
The BUILD Coalition, which has advocated to retain the ability to fully deduct business expenses, appreciated what they viewed as a “fresh approach” to tax reform.
"As policymakers turn to the details, the BUILD Coalition encourages them to remain focused on achieving their goal of pro-growth tax reform. Essential to this effort is maintaining the full deductibility of interest expense for all businesses, regardless of size or sector, so they can continue to make the long-term investments that create U.S. jobs and help drive growth,” the coalition said.
Duvall added farmers and ranchers face numerous challenges and it is important to recognize this creates special circumstances in regard to taxes.
“This move sets the stage for Congress to put tax reform on its agenda. Not only will reform strengthen our economy, but by addressing key issues like overall tax rates, capital gains taxes and enhanced expensing, it will be good for farms and other businesses,” he said.