NFU Urges Congress to Reject Elimination of Section 199A
WASHINGTON – Members of Congress are proposing to undo a newly instated tax break that is meant to level the playing field between agricultural cooperatives and corporations who received a dramatic tax break under the Tax Cuts and Jobs Act.
National Farmers Union (NFU) is urging Congress to instead seek a balance that does not weaken the important tax break for family farmers who sell to cooperatives. NFU members recently passed a special order of business regarding the provision, Section 199A, due to its value in improving the livelihood of farm families and in strengthening rural communities.
NFU President Roger Johnson issued the following statement in response to the proposal:
“Corporations just received one of the largest tax breaks in their history, the addition of 199A was an attempt to level the playing field for cooperative businesses. To repeal parts of this important tax break would be to strike at the single most important benefit family farmers received from tax reform.
“Not only would corporations be better off, but farmers would be disadvantaged by working with their cooperatives. Wage limits contained in this proposal will discriminate against family farms that don’t hire outside workers, especially if they work with small cooperatives who also have a limited wage base. Farmers could alternatively see the 20 percent deduction on taxable income reduced to 11 percent, if they do business with a coop. Under this new proposed language, farmers could sell to a private company and lock in the 20 percent deduction, or they can sell to a coop and receive an 11 percent deduction.
“Farmers Union calls on Congress to reject this draft language as it currently stands. We urge lawmakers to advance bipartisan legislation that removes wage limitations and maintains a farmer gross sales deduction that evens the playing field between corporations and cooperatives.”
National Farmers Union has been working since 1902 to protect and enhance the economic well-being and quality of life for family farmers, ranchers and rural communities through advocating grassroots-driven policy positions adopted by its membership.