Dodd-Frank, Death Tax and the Regulatory Assault on Small Family Farms
WASHINGTON – Small family farmers told the House Small Business Committee’s Subcommittee on Agriculture, Energy, and Trade today that capital access restrictions, the death tax and overregulation pose significant challenges to the future of America’s family farms.
“Small farms have always been a part of our nation’s fabric, and it cannot be stressed enough that the small family farm is a small family business,” said Subcommittee on Agriculture, Energy, and Trade Chairman Rod Blum (R-Iowa). “Although the industry has changed over time, agriculture is still a force pushing America’s economy forward. 41 percent of all land in the United States is used for farming. U.S. agriculture has a 45 billion dollar trade surplus with other countries, and while it may be surprising, over 93 percent of America’s farms are small family farms.”
“In addition to low prices, small family farms have a multitude of other issues to worry about. From high taxes, increasing regulatory burdens, and trouble selling their products internationally, it seems like government bureaucracy is only making it harder to run a small farm,” added Blum, who was chairing his first hearing as the Subcommittee’s new Chairman.
Washington Red Tape Holding Back Small Family Farmers
“Our biggest concern is over-regulation,” testified Tim White, the owner of White Farm LLC in Lexington, Kentucky. “The EPA’s WOTUS Rule is one such example. WOTUS has been a big concern to producers. The overreach in that regulation would require many beef producers to get permits, and comply with those permits, which would be a huge burden. Not to mention it would open us up to citizen lawsuits from litigious activist groups. Producers pride themselves on being good stewards of our country’s natural resources.”
“We maintain open spaces, healthy rangelands, provide wildlife habitat, and feed the world,” added White, who testified on behalf of then National Cattlemen’s Beef Association. “But to provide all these important functions, we must be able to operate without excessive federal burdens, like the WOTUS Rule. As a small business owner, I am particularly concerned with the lack of outreach to the small business community by federal agencies such as EPA.
“As a family-owned business, and knowing the detrimental impact this regulation could have on my operation, it is appalling the agencies could assert that it would not have a significant economic impact on small businesses,” said White. “It is clear to me that the rule’s primary impact would do just that. There was no outreach to us in the agriculture community before the rule was proposed. There wasn’t a meaningful dialogue with the small business community as a whole. And because of that, what we got was a WOTUS Rule that doesn’t work for small businesses and doesn’t work for animal agriculture. The positive news is that President Trump signed an Executive Order requiring the EPA to go back and revise the WOTUS Rule so it doesn’t regulate every drop of water in this country.”
Broken Tax Code Also Hurting the Family Farm
“Another way that D.C. is affecting the family farm is through current tax policy,” said Sarah Rickelman, the Manager of Degener-Juhl Farms in Hudson, Iowa. “As Congress looks to reform our nation’s tax policy I hope that lawmakers will consider the impact any change will have on the thousands of family farms across the country. While lowering individual tax rates is a positive reform, family farmers will ultimately pay more taxes if essential tax policies for small businesses are eliminated. “
“Agriculture is a capital-intensive business and being able to deduct business expenses is a critical tool – this should include the ability to deduct interest expenses,” added Rickleman, who testified on behalf of the Iowa Farm Bureau. “As a young farmer, I’m extremely concerned about the ability of the next generation to purchase their first piece of ground or expand their operation if they can’t deduct interest expense. A tax reform package that doesn’t include these provisions will ultimately increase taxes on family farms. On that same note, I hope Congress will finally and permanently eliminate the death tax while maintaining stepped-up basis. These tax provisions are essential to the survival of the family farm.”
Supporting The Next Generation of Family Farmers
“Obviously, farm income is directed to more things than just supporting the household,” explained Dr. John Lawrence, the Associate Dean and Director for Extension and Outreach at Iowa State University’s College of Agriculture and Life Sciences. “Farmers reinvest profits back into the farm operation by purchasing or improving land, machinery and facilities. It may be cash payments or financed purchases with annual loan service payments. The decision between family living expenses and investment in the farm is a balancing act as old as farming itself. If a family farm is going to sustain itself into the future, it must maintain its assets, whether they be physical or in support of the family.”
You can view full video of today’s hearing HERE and read full written testimony HERE.