Lugar Calls for Tax Relief This Year

July 21, 2000

Sen. Richard Lugar (R-IN), chairman of the Senate Agriculture, Nutrition and Forestry Committee, has urged the Senate to approve tax relief for farmers this year. "Farmers need this important tax relief to improve their net farm income," he said. "They need the tools to increase income and build on the existing farm safety net. They need the ability to average out income in high and low years. And they need this tax relief this year."

Lugar and a bipartisan group of senators wrote to the chairman and ranking member of the Senate Finance Committee, Sens. Bill Roth (R-DE) and Patrick Moynihan (D-NY), urging them to include tax reform for farmers – including establishing IRA-type accounts and income averaging and Lugar's "hunger tax incentive bill" – in any comprehensive tax bill that the Senate

considers this year.

As part of the recent consideration of the estate tax and marriage penalty tax bills, an amendment that contained these important tax bills aimed at assisting the agricultural community passed the Senate unanimously. "Although this amendment was ultimately stripped from the underlying legislation, we believe it imperative that the Senate address this package of legislation before Congress adjourns," the senators wrote.

Lugar's hunger relief tax incentive bill would make it easier for restaurants, food processors and farmers to contribute food to food banks, pantries and homeless shelters. It would allow the deduction of the full market value of food donated. Under current tax law, the deduction allowed does not cover expenses incurred by the business.

"Under current law it is cheaper for a business or farmer to throw leftover food away than donate it to the hungry. This should not be the case. If just 1% of the 96 billion pounds of food wasted each year in the United States went to hunger relief charities, their food supply would be doubled," said Lugar.

Farm and ranch risk management (FARRM) accounts would allow farmers to deduct up to 20% of their taxable net farm income and put it aside in a tax free account for up to five years, allowing farmers to smooth out volatile income streams and minimize risks.

Lugar and Rep. John Boehner (R-OH) also introduced legislation earlier this week that includes many of the same tax provisions. The legislation would increase farmers' competitiveness by opening foreign markets, providing tax and regulatory relief, and expanding risk management options for farmers.