Late Wednesday, the House passed a one-year tax extender package (HR5771 Tax Increase Prevention Act of 2014) on a 378 to 46 vote. Agriculture advocates were paying close attention to the extension due to the expiration of section 179 in 2013. Many U.S. farmers have complained the expiration of the provision hampered their ability to purchase new farm equipment.
Until 2013, section 179 allowed farms full depreciation deductions of much machinery with a maximum deduction of $500,000 and a phase-out threshold of $2 million. The expiration meant the levels dropped to $50,000 with a phase-out of $500,000. The package passed Wednesday includes the section 179 provision retroactively for 2014.
The Senate must now take up the tax legislation.
While better than nothing, the single-year package was not greeted without criticism. The lame duck House turned back an effort to pass a two-year extension.
“Today I joined my colleagues in the House to support the extension of many important tax provisions that benefit individuals, small businesses, and the overall health of the economy,” said Texas Rep. Randy Neugebauer after the vote. “The extension of Section 179 and bonus depreciation are especially important to hardworking farmers, ranchers, and small business owners in the 19th District of Texas.
“To get the full economic benefits of these tax provisions and generate greater certainty for all Americans, Congress should focus on permanent tax policy that overhauls our tax code for individuals and businesses. Moving forward, the President must work with Congress instead of issuing veto threats to bipartisan negotiations before they even conclude. This is the work that must be done to jumpstart our economy.”
Bob Stallman, president of the American Farm Bureau Federation, said “Farmers and ranchers rely on tax provisions that give them the flexibility they need to invest in their businesses and boost their local economies. Farm Bureau is pleased the House has acted to extend several key tax provisions this year. We urge Congress to bring a tax extender package to completion before the year’s end.
“Small business provisions like Section 179 and bonus depreciation increase cash flow, and that let farmers and ranchers put their money back to work immediately so they can care for their land and animals.
“Provisions that encourage the production and use of clean, renewable energy are especially important. Farmers and ranchers depend on affordable energy and recognize the importance of fuel and power tax incentives to boost its production and promote innovation.
“We are glad to have these temporary extensions, but we know these issues will come up again. We still need a long-term solution so small businesses can have the certainty they need to plan for the future.”
The American Soybean Association called on Congress to pass a long-term tax fix. “ASA first and foremost supports a long-term extension of several of the items included in today’s short-term fix,” said Ray Gaesser, ASA president. “These initiatives include the dollar-per-gallon biodiesel tax credit, expensing for farm equipment and infrastructure under the Section 179 expensing provision, and bonus depreciation on farm assets. Such an approach provides greater certainty and a more stable climate for the farmers and producers who make use of these programs, and we were very disappointed that agreement was not reached on a broader measure.
“That said, we support the House’s passage of their short-term extension in the absence of a more permanent solution. While it remains only a stopgap measure, we hope that the Senate will take up and pass it quickly. At that point, we urge both chambers to join together and tackle the work of extending these critical tax incentives for the long term.”