Thursday, February 27, 2014

Bravo, Rep. Camp...  

This wayward Republican was heartened to see a very reasonable proposal from Rep. Camp for tax reform. While there is much I would quibble with, it looks to me like just everybody's special interest ox gets gored.
It turns out that Camp's plan specifies the tax breaks he wants to close in considerable detail. And according to the analysis of the Joint Committee on Taxation, which is usually fairly reliable, it would be both revenue neutral and distributionally pretty neutral too. Over ten years it would raise about $3 billion more than present law, and the chart on the right shows how tax rates would be affected. Generally speaking, effective tax rates would go down for the poor and the middle class, and would go up slightly for the affluent. (These are estimates for 2015. They change slightly in subsequent years.) [More] 
But what's in it for me, I can hear you say. Well, I've got good news and some less good news.

Some of the farm-specific details I could find:
  • Cash accounting for all farms (although your accountant thinks it is a really bad idea)
  • Sec. 179 made permanent at $250,000; phased out at $800,000 total purchased.
  • Repeal of soils and water conservation expenses deduction
  •  Fertilizer would not be a deductible expense (if I'm reading this right)
Sec. 3115. Repeal of deduction for expenditures by farmers for fertilizer, etc.
Current law:
Under current law, a taxpayer engaged in the business of farming may elect to
deduct immediately expenditures for fertilizer, lime, ground limestone, marl, or other materials to enrich, neutralize, or condition land used in farming.
Under the provision, the special rule for deducting expenditures for fertilizer and
other farming-related materials would be repealed. The provision would be effective for
expenses paid or incurred in tax years beginning after 2014.
  •  Repeal of 1031 exchanges
  • Repeal of biodiesel  and cellulosic ethanol tax credits
  • Repeal of farm income averaging
  • Generally slower and straight-line only depreciation after 179 deductions
  • C ans S Corp stuff I couldn't understand
Of course, farmers will enjoy (?) all the benefits available to all filers that will make the headlines - lower rates, bigger standard deduction, etc.

More later.

Bottom line, we'll mostly hate it in farm country, but I think it's a remarkable start from the Republican side.

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