What's ahead for farmers, ranchers in new tax bill

Daryl Lies, who farms at Douglas and leads the North Dakota Farm Bureau, an organization with 27,000 member families, attended the American Farm Bureau Federation's annual convention this month held in Nashville, Ten.

President Donald Trump spoke to the group Monday, Jan 8, about the tax reform package signed into law Dec. 22.

Lies said there were several highlights of Trump's speech, including:

• Doubling of the threshold for the estate tax

• Companies can immediately write off the full cost of new equipment.

• Rolling back the Obama administration's interpretation of the Clean Water Act, which had greatly expanded the list of bodies of water subject to federal regulation.

• Calling on Congress this year to renew the farm bill, which provides federal crop insurance.

At the convention, Trump also signed an executive order promoting the expansion of broadband internet into rural areas that lack the connectivity.

In his weekly "Dialogue with Daryl" podcast Wednesday, Lies said, "We had success in getting policy passed and adopted for the American Farm Bureau policy book that is going to assist many farmers in North Dakota and South Dakota. And that's dealing with wetland policy."

Lies, who was re-elected president of the organization at its annual meeting in Fargo last November, said some reform policy regarding sodbuster and swampbuster was passed "and tied to it, if there isn't sufficient progress in reform, that we should decouple crop insurance from conservation compliance, especially in light of the USDA taking away the 10 percent buy-up in prevent plant coverage."

"We're willing, as farmers, to do our part, and save the federal government money. But, if you're going to change our protections, then you must let farmers farm and ranchers ranch and manage their land to the best of their ability."

The convention also addressed policy that there should be a buyout program for the U.S. Fish and Wildlife Service easements. "These are all big wins, important strides for the Northern Plains farmer and rancher," he said.

Mark Watne, a Velva farmer and president of the North Dakota Farmers Union, said tax cuts do not come without risks.

The estate tax, also known as the death tax, and the number of family farms it impacts is a misnomer, Watne said.

In a speech last fall, Trump said the estate tax was a "tremendous burden" for family farms.

But Andrew Swenson, a farm management specialist and researcher with North Dakota State University, told Public News Service prior to the tax reform package being signed, that the estate tax has a minimal impact in this state. He said going back to the most recently available tax returns in 2014, about 15 estates in North Dakota had to pay the estate tax and only about two or three were farms. He said the numbers are probably similar in more recent years. The tax is graduated and levied on estates valued at more than $5.5 million or $11 million for married couples.

In 2016, less than a half percent of the country's nearly 40,000 farm estates paid an estate tax, according to the Department of Agriculture.

Watne said farmers and ranchers are hoping for a strong farm bill.

Sen. John Hoeven, who serves as chairman of the Senate Agriculture Appropriations Subcommittee and a member of the Senate Agriculture Committee, said he and Trump, at a recent meeting, talked about the importance of a strong farm bill.

"I emphasized crop insurance, so I was very pleased that the president expressed his strong support for crop insurance," Hoeven said in a news release this week.

Further, Hoeven said the president understands "the importance of investing in rural America and making our communities stronger and more vibrant."

"We appreciate the administration's focus on building rural infrastructure, including ensuring better internet access," Hoeven added.

Sen. Heidi Heitkamp, a member of the Senate Agriculture Committee, said, in response to Trump's address to the Farm Bureau group, "Every day I come to work fighting for rural America, and today the president helped highlight many critical issues like agriculture trade, opioid abuse, and access to high-speed internet.'

Heitkamp said one of the biggest concerns she hears from North Dakota's farmers and ranchers is the worry that changes to trade policy could hurt their ability to export their goods.

She said her top priority is ensuring that the next farm bill supports North Dakota — especially in times of drought and low commodity prices.

Heitkamp said she's been clear about her serious concerns with how the Republican tax bill will impact middle income families across rural America in the long run — including farmers. "The bill will provide temporary, relatively modest tax decreases for farmers and middle income families that will disappear after 2025, and at that point, costs will go up. Meanwhile, the wealthy and corporations will reap permanent rewards. That isn't fair," Heitkamp said.

Reform details

The recently signed tax reform package includes for farmers, ranchers and small businesses:

• An amendment to ensure the fair treatment of cooperatives and their members.

• For the first five years, allows full expensing or writing off the cost of new investments, which is phased down over an additional four-year period.

• Expands the Section 179 expensing of equipment on a permanent basis.

• Doubles the estate tax exemption, while maintaining the step-up in basis for capital gains.

• Maintains interest deductibility and the property tax deduction for small businesses, farmers and ranchers.

Source: Sen. John Hoeven's office.