Editor's note: The following commentary was written by Josh Rolph, director of international trade, farm policy, taxation and plant health for the California Farm Bureau Federation, and featured in the Ag Alert newspaper.
Farm Bureau's message to elected officials in Washington, D.C., during the last several years on tax issues has been to extend and make permanent the Bush tax cuts of 2001 and 2003, which included a phase-out of the estate tax. Although the estate tax still exists, we believe we achieved significant improvement, considering the circumstances. While we continue to press for elimination of the estate tax, our advocacy today has turned to a far broader topic: sweeping reform of the U.S. tax code.
Our member-adopted policy states that Farm Bureau supports replacing the current federal income tax with a fair and equitable tax system that encourages success, savings, investment and entrepreneurship. The new code should be simple, transparent, revenue-neutral and fair to farmers and ranchers. More than 96 percent of farms and 75 percent of farm sales are taxed under IRS provisions affecting individual taxpayers.Thus, any reform package should be comprehensive in addressing both corporate and individual taxes.
The challenge we have is educating members of Congress that farm businesses are unique. In our line of work, we experience big swings of income and when purchases are made, they are made in clumps. We emphasize that farming is cyclical and that certain tax deductions and credits can minimize farmers' liability, to help representatives better understand our business.
As part of a Farm Bureau delegation to Washington last month, I went with CFBF First Vice President Kenny Watkins and three other farmers to a meeting with a senior staffer on the House Ways and Means Committee. As we discussed our concerns about some of the committee's proposals, which I'll explain in more detail below, simply sharing personal experiences helped the staffer to understand the real-world implications the proposals would have for farmers and ranchers. We still have work ahead of us, but the meeting emphasized that your personal stories can be very effective in bringing about change in Washington.
The last major change to the tax code occurred nearly three decades ago. Back then, the objective of the Reagan administration was to greatly simplify the code, remove many deductions and reduce the number of tax brackets. Enacted in 1986, the new code managed to do all of those things—except no mechanism was created to ensure that the code would be simple. It now takes close to 74,000 pages to explain the U.S. tax code, a number that has grown from 40,000 pages as recently as 1995.