The first major agricultural flaw found in the new tax law has “got to be changed,” said Iowa Sen. Chuck Grassley, a member of the tax-writing Senate Finance Committee. Grain companies are very concerned that Section 199A of the new law “would put them out of business if we don’t do something” because it offers a larger deduction to farmers when they market their products through cooperatives than when they deal with private companies.
“There’s a lot of effort here [in Congress] to change it,” said Grassley during a teleconference. He suggested the leaders of the Senate and House tax committees should say publicly that Section 199A was a mistake “and it’s going to be changed, so don’t count on this” tax break. Section 199A was an unintended consequence of overhauling the tax code, he said. “You find out some of these things afterward.”
The South Dakota Farmers Union, on the other hand, said Congress should leave Section 199A in place, reported DTN. The group said farmers would benefit from the larger tax deduction — up to 20 percent of their total sales to cooperatives — and that grain companies would benefit from the lower corporate tax rate.