The National Council of Farmer Cooperatives and the National Grain and Feed Association are both in favor of a legislative proposal that would fix an unintended consequence of the Republican tax overhaul. The changes to tax law give huge tax breaks to farmers who sell their goods to cooperatives over other types of businesses. Politico says congressional leaders want the fix to be included in the fiscal 2018 spending package, which has to pass by March 23. However, it’s not clear if Democrats are willing to allow any tax provisions to be included in the bill. Over 100 contentious riders to the bill are said to be in play as Democrats push for a clean spending package. The co-op fix would repeal the tax law change that gave farmers a 20 percent deduction from their gross sales by selling to co-ops. And, it would restore the tax benefits that co-ops and their farmers enjoyed under the old tax code, known as the Section 199 deduction for manufacturers, which Republicans repealed in the new tax law.
The proposed fix would be retroactive to January first in order to negate any perceived gains as a result of what Republican lawmakers admitted is an error. It would allow farmers selling to co-ops to claim a 20 percent deduction on net business income.
Source: NAFB News Service