House and Senate committee chairmen continue their months-long battle over reauthorizing various agriculture programs under what is usually called the "farm bill," and some of the consternation is over tax provisions. Both chambers earlier agreed that they want to spend $10 billion over the spending "baseline" for the programs (which is essentially an assumption of a continuation of current policy). But the version House conferees recently offered cut that down to $6 billion above baseline by removing a disaster trust fund that several Senators want, while Senate conferees want to include $2.5 billion in tax breaks related to agriculture and energy.
Among the tax breaks is a half a billion dollars in incentives related to livestock, including a provision that would reduce capital gains taxes on horses which is supported by Senate Minority Leader Mitch McConnell (R-KY). Other tax breaks range from incentives to protect endangered species to encouraging the use of energy from wind and other sources, many of which seem to have little, if anything, to do with farming.
How to pay for new spending and tax breaks has also been controversial.
The White House had opposed a revenue-raising provision that the House attached to its version of the farm bill passed back in July (H.R. 2419). Initially proposed by Rep. Lloyd Doggett (D-TX) and endorsed by Citizens for Tax Justice, this provision would raise $7.5 billion over ten years by stopping foreign corporations with subsidiaries in the U.S. from manipulating international tax treaties to avoid taxes. The Senate passed a farm bill in December that had its own revenue-raising provisions. The largest was a provision that would reduce tax avoidance schemes by codifying what is known as the "economic substance doctrine," which basically means taxpayers will not obtain tax benefits from transactions that were entered into for no other purpose than to avoid taxes. Citizens for Tax Justice advocated for this measure (although calling for a stronger version of it).
Now the House Ways and Means Committee chairman Charles Rangel (D-NY) has proposed a different revenue-raising provision that would require credit card issuers to report payments made by cardholders to merchants. The Senate wants to raise revenue by requiring brokers of publicly traded securities to report the basis of a security in a transaction to ensure that capital gains taxes are paid fully. If that sounds familiar, it is. The House Ways and Means Committee included that offset in the package of tax provisions it approved to address the foreclosure crisis, as reported in this Digest.
An extension of the farm bill currently in effect expires Friday, and the White House has threatened to veto another extension.