The U.S. House of Representatives passed its version of federal tax reform on Nov. 16 – a version Bob White, Indiana Farm Bureau director of national government relations, said was predominantly favorable for agriculture.
Then on Dec. 2, the Senate version of the bill passed with a 51-49 vote.
As the bill entered the Senate, White said there were a couple areas of concern. The proposed removal of an exemption in the Unrelated Business Income Tax (UBIT) was one. This change would have required tax-exempt organizations to pay income tax on money earned from activities not related to the organization’s exempt purpose. This would have impacted state Farm Bureaus, the American Farm Bureau Federation and a host of other nonprofits such as AARP and the American Red Cross.
“It was good to see that the Senate decided to uphold the UBIT exemption for nonprofits,” White said. “It would have really affected operations at all state Farm Bureaus and AFBF negatively.”
The second concern was the elimination of the Domestic Production Activities Deduction or Section 199. This deduction is vital to co-ops and their member-owners, White said. Today, cooperatives deduct proceeds from products they produce and pass the deduction back to their members. Without the deduction, farmers could see a significant increase in their taxes. The Section 199 deduction is not present in either the House or Senate versions of the bill.
“The cooperative groups are working hard to get that deduction restored before the final version of the bill passes,” White said. “They have been urging their leaders and members to explain to Congress how important the provision is to their operations since the House version of tax reform was introduced.” White added that AFBF also has been involved in these efforts through correspondence and discussions with legislators in D.C.
Even though bills have passed in the House and Senate, nothing is set in stone. As of The Hoosier Farmer’s publication deadline, the bill was scheduled to go to the conference committee on Dec. 13, where conferees will reconcile the differences in the two pieces of legislation. The conference committee is made up of House and Senate members from both parties.
“This process isn’t over by a long shot,” White said. “Everyone will have to stay tuned to see what the conference committee comes up with for the final bill. Then, the next hurdle will be securing the votes needed to pass that version.”