On Friday, the long awaited tax reform bill saw the light of day and made its way out of the House finance committee. Called the Tax Cuts and Jobs Act, the bill includes the tax reform measures the Trump Administration has been promising since the president took office.
While many things are still unclear about the bill, according to Jim Wiesemeyer Farm Journal’s Washington policy analyst, there are some wins for farm country. The bill doubles the asset exemption on the estate tax immediately and eliminates the tax after 6 years.
“I personally think [the estate tax portion] is going to be modified once we see the final bill,” Wiesemeyer told AgriTalk host Mike Adams. “It’s got a lot of good provisions in it, I think, for farmers.”
In addition, it lowers the top rate for non-corporate pass-through businesses from 39.6% to 25%.
Wiesemeyer says some ag cooperatives are concerned about the language on that portion because it puts in place some safeguards to establish between individual wage incomes and pass-through business incomes.
“That is a serious issue for a spate of stakeholders in the ag industry,” he says.
In addition, the bill protects the ability of “small businesses to write off the interest on loans.” While it is unclear whether farming enterprises are included in the definition of “small business,” Wiesemeyer says he’s been told that definition includes farming.
“In any major bill you’ve got to read the definitions to be sure,” he adds.
One of the major concerns across farm country was stepped-up basis on inherited assets. Wiesemeyer says he believes stepped-up basis was left intact.
Kansas Senator Jerry Moran told Adams the bill is expected to unlock potential for job growth in the U.S. While the House has been working on their version of a tax reform bill, the Senate has been long at work on theirs as well. If approved by the two chambers, the two versions of the tax plan will have to be reconciled before heading to the President’s desk.
“My impression is that the house and senate have worked to try and keep the differences at a minimum between the different versions of the bill,” Moran says adding he hopes the bill will be worked on in a bipartisan way. “It takes two to tango.”
Farm groups across the country are applauding the House for getting a bill put together, but most are giving their analysts the weekend to pore through the language before advising their constituents on what this bill will mean for them. In short, stay tuned for more information to come forth on Monday.