TheFirstFurrow

April is here, and with it comes warmer weather, spring break vacations, . . . and taxes. Yes, we hate to bring it up but Tax Day is just around the corner — April 17th to be exact — so we thought we’d look a little closer at some of the finer points of the tax reform law that Congress passed a few months ago. We’ve fired a handful of questions to Pat Wolff, Senior Director of Congressional Relations for American Farm Bureau Federation, and she’s given us the inside scoop on what’s new with taxes and what’s on the horizon.

Question #1: The Tax Cuts and Jobs Act is a comprehensive law, making changes to the nation’s tax policies that impact practically every individual and business in the US. Which provisions do you think are most important for North Carolina farmers and how does this reform package help them going forward?

The cornerstone of tax reform is lower tax rates for individuals and businesses. For farmers that means being about to keep more of their money to reinvest in their operations. Farms that pass profits through to their owners for taxation (sole-proprietorships, partnerships and under Subchapter S) will be taxed from zero to 37 percent with that top rate kicking in at $600,000 of income. That’s compared to the old law where the top rate of 39 percent used to start when income exceeded $470,000. The top corporate tax rate permanently shrinks from 35 percent to 21 percent.

Expanded deductions will allow farmers to write off more of their expenses immediately. This will make it easier to reduce taxable income by matching income with offsetting expenses. Section 179 small business expensing is permanently doubled to $1 million. There are no limits on bonus depreciation. And almost all farm businesses get to keep using cash accounting and deduct their interest expenses and property taxes.

Question #2: The reduction in the corporate tax rate has gotten a lot of attention, but the majority of North Carolina farms are family-owned sole proprietorships and partnerships. Are there any provisions in the new tax law that will help family-owned sole proprietorships and partnerships?

Tax reform provides a new business deduction that is available only to sole-proprietorships, partnerships and those that pay taxes under Subchapter S. Individuals operating pass-through businesses will be able to take a tax deduction equal to 20 percent of net farm income with limitations if taxable income exceeds $315,000 for a couple.

Question #3: Considering that most farms have little liquidity and their capital is usually tied up in the land and farm equipment, why was it important that Congress expand the estate tax exemption level?

With Congress back in their districts for August Recess, we thought it’d be a good time to talk about some federal issues that are a high priority for Farm Bureau. Wrapping up this week: regulatory reform.

All Americans have an interest in a regulatory process that is transparent and fact-based, respects the will of Congress, and observes the separation of powers in the Constitution. Federal regulations have a direct impact on farmers and, over the years, the breadth and extent of that regulatory landscape have increased. Farm Bureau has taken a stand against regulatory overreach and is working to reform the federal regulatory process and preserve farmers’ and ranchers’ land-use and water rights.

Regulatory Overload

Today, farmers and ranchers are faced with a flurry of requirements through the Clean Water Act, the Endangered Species Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Food Safety Modernization Act, immigration and labor regulations, and interpretation of the Federal Land Policy and Management Act—to name just a few.

Often, these requirements are the result of federal regulations; sometimes they emanate from court decisions. But no matter how they are established, the result often can be controversial. Stakeholders disagree on the language in the rule, and affected parties disagree on the science, the data or the models underpinning one or the other.

Farm Bureau strongly believes that all Americans, including farmers and ranchers, need a regulatory system that is fair, transparent, adheres to the will of Congress, takes economic impacts into account and respects our freedoms.

With Congress back in their districts for August Recess, we thought it’d be a good time to talk about some federal issues that are a high priority for Farm Bureau. This week: WOTUS.

So what is WOTUS? Back in 2015 the Environmental Protection Agency (EPA) and US Army Corps of Engineers (Corps) adopted a rule defining the scope of “waters of the US” (WOTUS) protected under the Clean Water Act (CWA). That rule, the WOTUS rule, expands federal authority beyond the limits approved by Congress and affirmed by the U.S. Supreme Court.

But you may be thinking, ‘didn’t courts strike down the WOTUS rule?’ Yes and no. The rule has never been implemented because it was stayed in both federal district court and a federal court of appeals. But those court orders are only temporary. And while the EPA’s current plan is to eliminate the 2015 rule and work on crafting a better WOTUS definition, environmental activists desperately want to preserve the 2015 land grab.

The impact of the 2015 rule on farmers will be enormous. That’s because the rule effectively eliminates any constraints the term “navigable” previously imposed on the Corps’ and EPA’s CWA jurisdiction, and the list of waters deemed “non-navigable” is exceptionally narrow—providing that few, if any waters, would fall outside federal control. This kind of shift in policy means that EPA and the Corps can regulate any or all waters found within a state, no matter how small or seemingly unconnected to a federal interest.

With Congress back in their districts for August Recess, we thought it’d be a good time to talk about a some federal issues that are a high priority for Farm Bureau. First up this week: tax reform.

Congress is starting to get serious about tax reform. Both the President and leaders in Congress say they want to develop a tax reform plan this fall. But what will it look like? Will it include the things farmers need to be successful?

Agriculture operates in a world of uncertainty. From unpredictable commodity and product markets to fluctuating input prices, from uncertain weather to insect or disease outbreaks, running a farm business is challenging under the best of circumstances. Farmers need a tax code that recognizes their unique financial challenges.

Farm Bureau supports replacing the current federal income tax with a fair and equitable tax system that encourages success, savings, investment and entrepreneurship. We believe that the new code should be simple, transparent, revenue-neutral and fair to farmers.

This week we interviewed Warren Leadership Fellows Daniel Radford and Kortney Smith, who spent this summer interning with North Carolina Farm Bureau learning about public policy and agricultural advocacy. Daniel is majoring in Animal Science and Agricultural Science with a minor in Agricultural Business Management at NC State University; Kortney is a rising senior at NC State studying Agricultural Education.

What was your favorite part of the internship?

Kortney: My favorite part of the internship was flying out to Washington, D.C. with Linda Andrews and Mr. Wooten for a few days. I had never been to D.C. so it was a great experience. It was really eye-opening to see the major differences between how things are handled at the state level versus on a national level and I may have been inspired just enough to possibly take my future career back there!

Daniel: My favorite part of the internship was being able to expand my network, and learning more about the legislative process. Everyone at Farm Bureau has been very welcoming and willing to help in any way that they can, and I am very thankful that they made me feel welcomed this summer. I really enjoyed meeting everyone and building these relationships.

What did you find the most challenging during your internship?

D: Since I was new to working with policy, it took some time for me to learn how the whole legislative process works. Jake and Paul spent many hours mentoring me and Kortney on how everything works at the General Assembly. On the first day, they spent time explaining how to look up bills and discussed how bills move through the General Assembly. I can definitely say that I would have been lost without them, but with their help, I understand the process a lot better than I did when I started.

K: The most challenging part of the internship was definitely learning how to navigate the General Assembly website and understand how bills were moving and what was important in each. Bill language can sometimes be very backwards and confusing, so we had to learn how to follow through all of the citations and correctly interpret what that particular provision meant. After the first few weeks though, we began to get the hang of things! We didn’t always interpret correctly, but we made drastic improvements from our first day!

What was the best advice you received?

K: Without a doubt, the best advice I received was to always ask questions. You can either sit and stay confused about something or ask questions and get a better understanding. There were so many times that I had no idea what was happening, but when I asked questions, things always made more sense and I could actually follow along and get more out of a particular experience.

D: Have an open mind and be open to new opportunities. Being open to new things has allowed me to be able to get the most out of my experience here at Farm Bureau. Walking into my internship this summer, I can definitely say that I did not know what to expect. This summer has been one I will always remember. As my internship is coming to an end, I am thankful for the many opportunities that I have been given while being a part of the Farm Bureau team.

The following commentary is by North Carolina Farm Bureau President Larry Wooten.

Immigration reform has been discussed, debated and argued for years, but eventually concludes with the same tired result – “next year is the year!”  To be blunt, fixing our worn-out immigration system does not require a rocket scientist. And this year needs to be the year.

What’s Going on with the Ag Workforce?

The short answer is, it’s changing. When I was still actively farming during the 1970s, 80s, and 90s, most of our farm workers were American citizens. But during the 90s that began to change, and farmers had to react to the change in their labor pool. What was happening over this time is American workers were taking other types of jobs for a number of reasons, but partly because people were becoming more educated and partly because of urbanization. Still needing workers, farmers began hiring more foreign-born workers because they were willing to do the job, and do it well.

Another trend farmers have been riding is mechanization. As farm workers have become more difficult to find, many farmers have looked to technology to help them get the job done. And for many farmers, technological advances have been a huge help in addressing workforce shortages.

The problem is that farmers aren’t magicians – eventually they reach a breaking point. And if we aren’t there yet, we’re getting close.

First and foremost, congratulations to Ray Starling on being named Special Assistant to the President for Agriculture, Trade and Food Assistance. NC Farm Bureau President Larry Wooten said it best, “This appointment sends a clear message that the White House is serious about addressing the needs of American farmers and rural communities, and I believe Ray Starling has the knowledge, experience, and vision to be a strong advocate for American agriculture.”

Wooten added, “Having grown up on a farm in Eastern North Carolina, Ray has a deep and personal understanding of what our farmers are experiencing and what they need to grow and succeed. Combined with his extensive knowledge of agriculture policy, Ray has proven to be an invaluable asset in supporting farmers and growing North Carolina agriculture.”

Now that he has been appointed, what will he do?

This week’s gas shortage in North Carolina presents an opportunity to talk about another reality of daily life some people often take for granted: our food supply.

The recent Colonial Pipeline leak in Alabama is a reminder that a disruption in local gas deliveries can create panic and confusion among consumers. But what would it look like if North Carolinians were facing a food shortage? We’re talking about a situation in which consumer access to food is significantly disrupted and people have difficulty finding basic food products such as milk, bread, meat and produce. It wouldn’t be a pretty picture that’s for sure.