Tax cuts are helping farmers
New USDA?report documents their positive financial impact
The Tax Cuts and Jobs Act, passed by Congress late in 2017, made major changes in the federal government’s tax policies. A new report just issued by the U.S. Department of Agriculture’s Economic Research has evaluated the impact of the tax changes on American agriculture.
The conclusion is that our nation’s farmers have benefited substantially from this tax cuts and tax-law modifications.
“Most family farms are run as small businesses, and they should be able to keep more of what they earn to reinvest in their operations and take care of their families,” U.S. Secretary of Agriculture Sonny Perdue, said in a statement highlighting the report’s findings. “Simplifying the tax code and easing the burden on farmers will free them up to make choices for themselves, create jobs, and boost the overall American economy. This report just shows what we knew all along: the tax cuts and reforms will benefit farmers.”
Here are some of the report’s key findings:
• It estimates that had the new law been in effect in 2016 the effective tax rate for farm operators would have been 13.9 percent versus the 17.9 percent that was called for as a result of the then-existing tax laws. About 91 percent of U.S. farms fall into this category.
• The average small farm household (less than $350,000 gross cash farm income, or GCFI, before expenses) would have paid 3.0 percent less in taxes in 2016 had the TCJA been in effect in 2016.
• Medium sized farms (between $350,000 and $999,999 GCFI) would have paid 5.8 percent less in taxes.
• Large farms (between $1 million and $4,999,999 GCFI) would have paid 3.4 percent less in taxes.
• Very large farms (more than $5 million GCFI) would have paid 1.7 percent less in taxes.
• Under the more generous exclusions from estate tax liability under the new law, only 0.11 percent of farm estates would have been required to pay any tax had the Tax Cuts and Jobs Act been the law of the land in 2016.
The farm economy is facing a variety of challenges this year. It’s very good news that the new tax law is putting more money in the pockets of our nation’s farmers. This important law is helping keep rural America thriving.