The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
~~The House Republicans will release a blueprint on June 24 regarding their plans for a tax code overhaul. This plan includes the following major changes to the tax code:
•Reduce the corporate tax rate to 20% (from the current 35% rate).
•Allow 100% business expensing of capital purchases.
•Eliminate the interest deduction.
This blueprint will be presented on June 24 and we will update you after we review the document, but we wanted to give you a heads up that the House Republicans are very serious about tax reform. It will not happen in 2016, but it will be on the table for 2017 (no matter who wins the White House or Senate) and the House plans may well be the starting point for any discussions.
What do they mean by "capital expenses?" Is that depreciable assets or all assets with a useful life greater than 1 year? If land is able to be written off, you will see the cost of all land rocket up regardless of its production capability just to save on taxes. Too many people's judgement is clouded when it comes to taxes.
Are they going to eliminate the interest deduction for homeowners?
You will see a lot of sole proprietorships move to C corps or LLCs treated as C corps.
As usual, the Republicans proposals are geared towards those that make big bucks!! But, as usual, neither party has a good map on taxes.
If they allow 100% expensing of capital, is farmland considered capital? If so, would it be saying I can now write off my entire principal purchase price, but in turn I would have no ability write off the interest expense associated with any of the debt. How are you seeing it presented?