Farmers and ranchers need the economic benefits that will follow from tax reform, the American Farm Bureau Federation told Congress in testimony submitted to the House Ways and Means Committee.
Weather, high debt-service, a lack of liquidity and the difficulties of passing on land from one generation to the next all make taxation an important issue for farmers and ranchers.
AFBF asked legislators to ensure that tax reform results in lower effective tax rates for small and family-owned farms and ranches as well as for corporations. The group urged lawmakers to:
- Continue cash accounting, which matches farm income and expenses better than accrual accounting methods to help farmers pay their bills and manage their taxes;
- Preserve interest deductibility – an important matter at a time when the Agriculture Department estimates 17.9 percent of fixed farm and ranch expenses go to interest payments;
- Reduce capital gains taxes, which help families pass farms to the next generation;
- Continue like-kind exchanges to defer taxes when farmers and ranchers sell assets and purchase similar property to replace them. Without like-kind exchanges, some farmers and ranchers would need to borrow to continue their farm or ranch businesses or, worse yet, delay mandatory improvements to maintain the financial viability of their farm or ranch;
- Eliminate the estate tax, which unduly penalizes farm owners who on average earn a small fraction of the income they might enjoy if they invested their dollars elsewhere.
A copy of the testimony can be found here.