Congress
Poised to Pass Substantial Tax Relief for Farmers
(5-21-03)
The House and
Senate have completed work on their respective tax relief and economic
stimulus bills and now must resolve their differences. Congressional
leaders hope to get a bill to the president before Memorial Day.
“Although
there is great debate on several major provisions in the bills, the
provisions most important to growers are expected to be included in
the final package without significant modification,” said National
Corn Growers Association (NCGA) Director of Public Policy Betsy Croker.
The Senate last
week passed the Jobs and Growth Tax Act (S. 2) that includes several
tax relief provisions important to growers. The bill allows individuals
to exclude 50 percent of their dividends from taxes in 2003 and 100
percent of dividends in 2004 through 2006. The tax would be reinstated
for 2007.
The bill also
allows small businesses investing $400,000 or less annually to expense
up to $100,000 for capital expenditures. This would be effective 2003-2007.
On May 9, the
House passed its version of the tax bill (H.R. 2), which also includes
provisions that would be helpful to growers. The House bill provides
additional marriage penalty relief and increases individual alternative
minimum tax exemptions. It also increases the amount small businesses
can expense from $25,000 to $100,000, as well as increases the definition
of small business from $200,000 of capital purchases to $400,000 and
indexes them for inflation.
“There are
several major differences between the two bills,” said Croker.
“The House bill would cut taxes by $550 million. The Senate
bill would cut them by a net $350 million.”
Deciding how to
best structure the dividend tax break, how to handle the Senate provisions
on aid for the states and whether the Senate’s revenue raisers
should be kept in the bill to offset the costs are also key differences
between both bills.
“The House
and Senate leadership would like to finalize their work on tax package
before the Memorial Day recess,” Croker said. “At this
time they are considering a number of strategies to accomplish that
goal.”