On Tuesday evening, the Senate passed a one-year $45 billion tax extender package -- which contains some 50 tax incentives for businesses, individuals and nonprofits -- on a 76 to 16 vote. Shortly after, President Obama signed the package into law.
Of major importance to the agriculture sector, Section 179 allows farmers to expense and depreciate property they have purchased or repaired for their operations. Lawmakers restored the maximum Section 179 expensing to 2013 levels. That means farmers can again claim $500,000 on capital investments for 2014, which had dropped to $25,000 at the beginning of the year. The package also reinstated a 50 percent bonus depreciation for the purchase of new capital assets, including farm equipment.
Section 179 “is important to (producers) so that they don’t see a tax increase, but it also keeps our economy going,” said North Dakota Sen. John Hoeven, during the floor debate. “Without it, small business will buy and repair less equipment, slowing down our manufacturing base and slowing down our economy. Quite simply, that means fewer jobs. It is not only because small business’s costs are increased, but it is also because of the uncertainty that is created when they don’t know the rules of the road. That is why this fix needs to be done on a permanent basis.”
Andrew Grobmyer, executive vice president of the Agriculture Council of Arkansas, said Section 179 “is very important for farmers, especially those who have purchased equipment and those doing tax planning for 2015.
“A one year fix is acceptable but we’d hoped it would be for longer. Hopefully, Congress can get the tax provisions figured out earlier next year and provide more long-term answers on the tax code.”
The American Soybean Association (ASA) was pleased with the passage of the bill, pointing not only to Section 179 but also to the extension of the dollar-per-gallon Biodiesel Tax Incentive.
“Today's passage of the tax extenders bill is a welcome relief to farmers as we close our books on 2014," said Wade Cowan, ASA president and Texas farmer. "While it's not the long-term fix we need, the legislation does include the dollar-per-gallon biodiesel tax credit, expensing for farm equipment and infrastructure under Section 179, and bonus depreciation on farm assets, all of which provide greater certainty and a more stable climate for the farmers and producers who make use of these programs."
Bob Stallman, president of the American Farm Bureau Federation, said passage of the package, “means farmers and ranchers are one step closer to tax laws that will let them reinvest in their businesses. … Thanks to tax provisions like Section 179 small business expensing and bonus depreciation, hard-working Americans will be free to put their money directly back to work on their land and in their local communities.
“The domestic energy market will continue to grow and innovate, thanks to the renewal of fuel and power tax incentives. A boost in our clean, renewable energy market here at home will help farmers, ranchers and consumers alike as more affordable energy is available.”
Many agriculture advocacy groups called for more than a one-year fix. "A new tractor, grain bin, or pivot will be nice to have under the Christmas tree," said Chip Bowling, National Corn Growers Association president. "But farmers shouldn't have to wait until the last two weeks of the year to find out whether they can afford to reinvest in their operations. This waiting game has a ripple effect across the agriculture industry and rural communities. NCGA looks forward to working with the next Congress to provide farmers with the certainty they need to make long-term business decisions."
Another section of the package dealt with improving the nation’s waterways infrastructure through a 9-cent increase to barge diesel fuel user fees. According to Waterways Council, Inc., “the user fee – currently 20-cents-per-gallon of fuel used while operating on the inland system – will be increased to 29-cents-per-gallon, effective April 1, 2015. Deposited into the Inland Waterways Trust Fund (IWTF), this amount is matched by General Treasury Funds and is dedicated to new construction and major rehabilitation of the inland system. The 9-cent-increase will add around $80 million annually to the IWTF. It is supported by those who pay it – just 300 commercial operators – while the entire nation benefits, from hydropower, municipal water supply, recreational boating and fishing, flood control, national security, and waterfront property development.”
Randy Gordon, president of the National Grain and Feed Association, said the barge fee increase will “provide the financial wherewithal to make the necessary improvements to our nation's waterways infrastructure. America's inland waterways infrastructure is in desperate need of renovation and modernization, and this much-needed increase in the user fee is absolutely essential to the future global competitiveness and economic growth of U.S. agriculture and other industries, and job creation they represent. Congress is to be commended for taking this action so work at long last can begin!"