Illinois farmers ranked estate tax repeal and interest deductions as their highest tax reform priorities, according to a survey conducted by Illinois Farm Bureau.
Adam Nielsen, IFB’s director of national legislation and policy development, surveyed about 150 members at farm bill listening sessions held between Jan. 25 and March 15. He asked farmers to prioritize a list of 20 Farm Bureau tax reform policy statements.
The results will help IFB advocate for issues that matter most to members.
“This is our opportunity, the first time in 30 years, to do tax reform,” Nielsen said. “It’s unlikely we’ll get everything we want, especially if they’re determined to simplify the tax code. So, let’s focus our efforts on the tax provisions that are most important to our members. This was a great opportunity to get out and put our policy in front of our members and let them tell us what is most important. And the results were very clear.”
Top priorities included:
Estate tax – More than 70 percent of surveyed members ranked estate taxes as their first, second or third priority.
Maintain the deduction for interest expense and other special deductions – The U.S. House Republican blueprint proposes limiting the deduction for interest expense to the amount of interest expense. For farmers, that equates to eliminating the business interest tax deduction because it is rare for a farm to have interest income.
“Interest expenses represent an enormous cost for farmers,” Nielsen said. “There are operating loans. There are loans to purchase equipment. There are loans to purchase land. Farmers are continually borrowing money. The uniqueness of farming and agriculture needs to be reflected in the tax code.”
Section 1031 “like kind” exchanges – About half of the farmers surveyed prioritized continuing like-kind exchanges for property such as land and buildings, personal property, including equipment and vehicles, and for breeding and production of livestock.
Cash accounting – Farmers like the flexibility of accelerating expenses and deferring income, Nielsen said.
Establishing Farmer Savings Accounts – Roughly half of those surveyed made Farmer Savings Accounts a tax reform priority.
Easing the retiring farmer’s tax burden by helping younger farmers – Many farmers supported polices to incentivize farmers who sell or lease land, equipment or other farm assets to beginning farmers. They also were interested in tax law changes that would allow farmers to avoid paying capital gains by allowing them to deposit the proceeds of the sale of land or machinery into individual retirement accounts with taxes due at withdrawal.
The likelihood of passing tax reform this year remains unclear. Nielsen said he believes Congress will first address repeal and replacement of the Affordable Care Act before shifting to tax reform.
“We will be prepared for whatever opportunities the tax reform debate presents us,” Nielsen said. “If we’re limited to picking just a few tax provisions from our policy, we now have clear marching orders.”