Soon after Sonny Perdue was confirmed as U.S. agriculture secretary last week, President Donald Trump met with farmers, signed executive orders and introduced a tax plan that includes repeal of the federal estate tax—actions that could have a positive impact on U.S. agriculture and mirror policies of the California Farm Bureau Federation.
“Having the president aware of farmers and farming issues is a positive thing. Having that awareness actually play out into some economic benefits or reductions of burdensome regulations or the tax structure, those are important,” said David Van Lennep, a forester and past president of the Santa Cruz County Farm Bureau. “Some of these governmental processes don’t take into account the harm they do, whether it is designation of a national monument or estate taxes for farms.”
CFBF President Paul Wenger said farmers have advocated for years for repeal of the federal estate tax.
“Relative to the tax reform proposals, the devil is in the details, but repeal of the federal estate tax is critical because it has burdened farming and ranching families for years, forcing them to sell land, livestock and equipment to pay the tax, or risk losing the farm or ranch,” Wenger said. “It is immoral that some families have been forced to sell or significantly change their operations due to a death.”
The Trump administration tax-reform plan includes immediate repeal of the estate tax and would reduce the tax rate for owner-operated businesses and corporations.
The tax plan would:
Create a business tax rate of 15 percent for all sizes of businesses; the current corporate rate is 33 percent.
Develop three individual tax brackets of 10, 25 and 35 percent. Currently, there are seven individual tax rates with a maximum rate of 39 percent. Sole-proprietors and pass-through businesses (partnerships and Sub S corporations) currently pay taxes at individual rates.
Double the standard deduction for individuals to $24,000 per couple, meaning couples earning $24,000 or less would owe no tax. All personal deductions would be eliminated, except for the home mortgage deduction and the charitable deduction.
Maintain the top capital gains tax at 20 percent. The 3.8 percent surtax on investment income would be eliminated.
Dale Moore, executive director of public policy for the American Farm Bureau Federation, noted the Trump tax plan is not revenue-neutral.
“Lost tax revenue will be made up by eliminating deductions and from new tax revenue that comes from economic growth,” Moore said. “Because Senate budget rules only allow for permanent tax changes that are revenue-neutral, some or all of the Trump tax proposals will be temporary. Farm Bureau policy supports tax reform being based on a revenue-neutral approach.”
The president also signed executive orders to promote agriculture and rural prosperity, and to review the Antiquities Act of 1906.
The first executive order created the Interagency Task Force on Agriculture and Rural Prosperity, which will look for ways to reduce the regulatory burden and increase economic opportunity in rural areas.
Shaun Crook, a Tuolumne County timber operator and chair of the CFBF Federal Economy and Farm Policy Committee, called regulatory reform a key issue for agriculture.
“The cost in both time and money for compliance can be a huge burden on small and large operations,” Crook said. “We have also found, in many instances, that to comply with one agency’s rules, you are forced to violate the rules of another. Legislators feel that they have to justify their jobs and that more laws and regulations are necessary. Well, how about we take a hard look at existing overlap and get rid of the (duplication)?”
Wenger said government has focused on “process-driven regulation.”
“We need to get back to result-driven outcomes,” he said. “For any regulation that is forced on businesses, and especially agriculture, there ought to be a clear end result that’s within reason and economically viable. Otherwise, regulation for the sake of regulation is ridiculous, and that is what we’ve come to.”
Trump’s executive order to review national monument designations under the Antiquities Act, which gives the president authority to declare historic monuments on federal lands, could affect six monument designations in California.
The order directs the secretary of the interior to conduct a review of all presidential designations or expansions of designations under the Antiquities Act since 1996.
“The intent of the Antiquities Act was for the preservation of Native American cultural sites to prevent looting. We have a history of abuse of this act, which has been used for legacy building and political favors,” Crook said.
The order could also affect the California Coastal National Monument Expansion Act. Van Lennep said that designation moved forward without an adequate process to hear concerns brought by local residents, in part about increased visitor traffic.
“A concern with the national monument designation is it’s going to bring a lot of people, and therefore public safety and quality of life for the residents might be greatly impacted,” Van Lennep said. “That was never really adequately addressed in the process.”
Also during the week, Trump decided to renegotiate the North American Free Trade Agreement, rather than withdraw the U.S. from the agreement with Canada and Mexico.
Upon hearing initial news that Trump was considering withdrawal from NAFTA, Moore said, “All of us in agriculture, manufacturing and all of the food trades just basically came uncorked in some form or fashion.”
“For a lot of sectors in agriculture, NAFTA is working well,” Moore said. “You have folks that love it and you have those who are not that tickled about how it has operated. We need to focus on those areas where we need to improve.”
Christine Souza is an assistant editor of Ag Alert. She may be contacted at firstname.lastname@example.org. Permission for use is granted by the California Farm Bureau Federation.