A provision in the overhaul of the U.S. tax code had some unintended negative side effects on certain agribusinesses across the country. The provision gives producers a chance to cut down on their taxable income if they sell their commodities to agricultural cooperatives. It appears that farmer-owned cooperatives like CHS, Inc., came out ahead of other agribusiness giants like Cargill and Archer Daniels Midland. The Republicans who crafted that part of the tax bill were John Thune of South Dakota and John Hoeven of North Dakota. Both say they were trying to preserve an important provision from the previous tax code and that the outcome for co-ops was not intentional. They are now working with other lawmakers and officials from the agriculture industry to find a reasonable solution. USDA Undersecretary for Marketing and Regulatory Programs, Greg Ibach, says the aim of the Tax Cuts and Jobs Act was to spur economic growth across America, including agriculture.
The goal was to preserve the benefits of Section 199A for cooperatives and their patrons. He says the current language picks winners and losers in the ag marketplace, which is not something that should happen.
Source: NAFB News Service