Senate & House Pass Tax Plan with Few Benefits for Family Farmers
Just days before its Christmas recess, Congress passed its sweeping plan for tax reform, putting most of its provisions into effect at the top of 2018. Here’s what changed: the top individual tax rate and the corporate tax rate were both lowered, from 39.6 percent to 37 percent and 35 percent to 21 percent respectively, saving the wealthiest Americans and companies substantial amounts of money and shifting the burden to the lower and middle classes and future generations. The estate tax threshold was doubled, from $11 million per couple to $22 million, a change that will benefit only the most lucrative farming operations. The law also includes repeal of the Affordable Care Act’s individual mandate, which made obtaining health insurance mandatory. Because of the mandate repeal, an estimated 13 million more Americans will forgo coverage, which will cause a significant increase in premiums for those that do purchase health care.
The total cost of these changes is not negligible; the Congressional Budget Office estimates the new tax law will increase national debt by more than $1.8 trillion from 2018 through 2027, including added interest costs. As NFU has previously detailed, statutory pay-as-you-go (PAYGO) rules require that deficit increases must be offset by cuts elsewhere, specifically across non-exempt mandatory programs. The Commodity Credit Corporation (CCC) is the second largest non-exempt mandatory program, after Medicare. It funds farm program payments, including Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). The current legislation would require the government to cut eligible programs by $150 billion per year. But since the total available pool of funding amounts to somewhere between $85 billion to $90 billion per year, all of those programs would be subject to a full sequester.
Congress also plans to account for the enormous price tag of tax cuts with entitlement reform, with anticipated cuts to the Supplemental Nutrition Assistance Program (SNAP), Medicare and Medicaid, Social Security, and other welfare programs. For lower-income individuals who rely on these programs, this would add insult to injury, as they likely would not benefit from tax reform either; data from the U.S. Department of Agriculture’s Economic Research Service estimates that up to 80 percent of the law’s benefits will go to the top 1 percent of farm households by income, while the bottom 20 percent will see a tax increase under the law.
New Report Highlights Need for Federal Investment in Rural Infrastructure
In early January, the Interagency Task Force on Agriculture and Rural Prosperity, a government-wide group representing more than 22 federal agencies and led by U.S. Secretary of Agriculture Sonny Perdue, released a report to President Trump. The 23-page document identifies the many needs and opportunities of rural communities and recommends over 100 legislative, regulatory, and policy changes to address them.
The report coincided with President Trump’s appearance at the American Farm Bureau Federation’s annual convention as well as the signing of two executive orders, both focused on streamlining and expediting requests to locate broadband facilities and supporting broadband tower facilities in rural America.
NFU is pleased that the administration is focusing on rural development generally, as rural communities have lagged behind their urban counterparts both socially and economically, and broadband access specifically, as its unreliability and unavailability is one of the biggest issues plaguing rural areas. Expansion of broadband holds the potential to address many other rural concerns, including economic development, educational opportunities, and access to health care. NFU hopes the President’s executive orders will reduce unnecessary regulatory barriers and encourage broadband development.
But more than deregulation, significant funding is needed to repair and upgrade rural infrastructure. The report reinforces the need for strong federal investment in rural areas through the promised infrastructure package.
The Washington Corner can also be found at www.nfu.org/corner.