Two large U.S. farm groups took opposite sides over legislation to repair an unintended flaw in the new tax law that gives farmers a huge deduction for crops and livestock sold to cooperatives. The 6 million-member American Farm Bureau Federation asked congressional leaders to include the correction to Section 199A in the government spending bill due by March 23.
The USDA also supports the legislative fix, which was produced by farm-state senators and Finance Committee chairman Orrin Hatch. The senators said their plan “restores balanced competition within the marketplace.” Some companies have said they would not be able to compete with cooperatives in grain marketing because of the large benefit farmers got from the poorly worded part of the tax law.
The National Farmers Union took the other side, arguing that Section 199A should not be changed. Corporations benefited immensely from lower tax rates in the new law, it said, arguing that Section 199A was “the single most important benefit family farmers received from tax reform.” Under the provision, farmers can take a 20 percent deduction on gross sales of agricultural products to a cooperative, with no limit on income level.
The Finance Committee fact sheet on Section 199A is available here.