Massive Tax Cut Bill Has Something For Farmers

July 23,1999

That $792 billion tax cut bill approved Thursday by the House has some provisions that should be welcomed by farmers. Taxes on freedom to farm contract payments would be paid in the tax year they are received; expensing office and farm equipment and supplies is increased form $19,000 to $30,000, and a 100% deduction for health insurance premiums would begin Jan. 1 for self-employed persons.

Several of the bill's provisions have been supported by farm organizations, including the health insurance premium deduction and the capital gains tax rate reduction from 20% to 15% and from 10% to 7.5% for individuals in the $15,000 income bracket. The estate, gift and generation-skipping transfer tax is phased down and repealed in 10 years, and contribution limits on retirement plans are increased from $10,000 to $15,000.

One farmer-friendly proposal not in the House bill -- but included in the Senate bill, which has not yet been passed -- is the so-called Farm and Ranch Risk Management account, an IRA-like tool to help farmers manage variations in year-to-year income.

The House approved the bill Thursday on a 223-208 vote. President Clinton has pledged to veto the bill. The Senate is to vote next week on its tax cut bill, but Clinton has vowed to veto that one as well. Democrats strongly opposed the House bill.