On Nov. 2, the U.S. House Ways & Means Committee released its tax reform plan. The plan, called the Tax Reform and Jobs Act, came with an aggressive timeline that proposed Senate floor action be completed before Thanksgiving.
Indiana Farm Bureau staff had a conference call on Nov. 3 with the American Farm Bureau Federation to discuss the tax reform timeline and provisions that will affect farmers.
Bob White, INFB director of national government relations, said the first version of the bill was favorable to agriculture overall.
“Our member farmers and ranchers were well represented in the first iteration of the tax reform bill,” White said. “However, there are still a couple of areas Farm Bureau needs to discuss with federal legislators in order to achieve a more positive impact for the agricultural community.”
One aspect of the bill Farm Bureau would like to see updated includes sections that could increase self-employment taxes for many farmers, White said. Pass-through businesses such as partnerships, S corporations and sole proprietorships may see reduced income tax rates, but the current bill also may increase self-employment taxes. An increase in self-employment taxes could cancel out any income tax benefit or even potentially increase the total tax liability for farmers.
Another provision that needs work is the temporary update to Section 179, which would increase expensing limits, but only for a period of five years.
“Temporary provisions tend to breed uncertainty,” White said. “Ideally, the provision would be permanent so taxpayers know what to expect. However, the expensive nature of the proposed update may be a stumbling block if it reaches the Senate Finance Committee as a permanent change.”
White noted that this bill is scheduled to move fast and said there will likely be a lot of modifications as it moves through the House and Senate. As of the writing of this article, some of the key takeaways from the bill before it went to the House for markup include:
This bill is still very fluid and portions of it are likely to have changed since the completion of this article. As of the publication deadline, the bill still needed to undergo House and Senate markup as well as floor action in both the House and Senate.