Ag groups push for Section 179 action in lame duck

By Spencer Chase

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WASHINGTON, Nov. 18, 2014 - Agricultural organizations and business groups are pushing Congress to act on tax extender legislation before the end of the lame duck session, saying retroactive action in 2015 will be too late for many farmers, ranchers and businesses.

In letters addressed to congressional leaders, the groups said tax extenders should be an immediate priority for lawmakers. They include the so-called Section 179 extender, referring to a tax code provision that allowed small businesses to deduct up to $500,000 in capital expenses immediately, rather than over time. That tax break and others expired at the end of 2013.  Action was also urged on the 50 percent bonus depreciation for the purchase of new capital assets, including farm equipment, which has also expired.

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“Farmers and ranchers rely on tax provisions that allow them to manage their cash flow and put that money back to work for their businesses,” American Farm Bureau Federation President Bob Stallman said in a release. “Section 179 and bonus depreciation are important tools that lend stability and help minimize risk in an unpredictable industry.”

In a conference call with reporters, Dorothy Coleman, vice president of tax and domestic policy with the National Association of Manufacturers, said the focus of the letters “is not on telling Congress how to do it, but asking them and strongly urging them to get it done.” She said many are hopeful the wide variety of supporting organizations will lead to action during the lame duck.

“I think if we had our druthers, this would have been done last year at this time, removing a lot of the uncertainty of this year,” Coleman said. “I think just pragmatically, we've got only a few weeks left in the legislative session, and there's a pretty robust agenda. We think that the extenders are a very important item and, again, we're very hopeful that they'll get them done as quickly as possible.”

If not addressed in the lame duck session, tax extenders could still be approved in 2015 and retroactively applied to 2014 purchases. Farmers like Mike Friemel, of Groom, Texas, say that would be too late for many making key purchasing decisions right now.

“Certainty and stability of the tax consequences of our business decisions is essential.” Friemel told reporters. “We are reluctant to invest capital in new equipment, buildings and facilities without knowing how the new assets will be treated for tax purposes. We don't want to tie up cash unnecessarily when it's needed elsewhere in the business. These tax provisions have significant impact on a broader community.”

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Drew Greenblatt, president and owner of Marlin Steel Wire Products of Baltimore, said improving the current research and development tax credit could help fuel product innovation, which he called “the secret sauce” critical to improving the economy.Proponents of the tax extenders say inaction could have far-reaching consequences to the economy ranging from capital purchases to charitable giving.

“Agriculture relies heavily on large investments in machinery, equipment and other depreciable assets,” National Cattlemen's Beef Association President Bob McCan said in a release. “And these tax provisions encourage cattlemen and women to make purchases and invest in expansion of their business, in turn investing in the expansion of rural America.”

In all, three separate letters were sent to Capitol Hill today. A letter addressed to Senate and House leadership was signed by 42 ag organizations that outlined the importance of Section 179 in a potential tax extenders package. Two separate, but identical letters sent to all members of the House and Senate were signed by more than 500 organizations, companies, and local chambers of commerce stressing the importance of action during the lame duck session.

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Agri-Pulse Associate Editor Sarah Gonzalez contributed to this report

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