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Grassley on 199A: ‘It’s got to be changed’
Iowa Senator Chuck Grassley says Congress needs to fix the 199A tax provision that gives co-ops an advantage over private grain buyers.
In a conference call with reporters, Grassley said he’s heard from private grain buyers that the Section 199A deduction could put them out of business. He says that provision, which allows farmers to claim a 20 percent deduction on all payments received on sales to cooperatives, must be fixed.
“We have to correct it,” Grassley says. “Even the co-ops have to know we wouldn’t do anything to hurt the competitive market force through this bill. And it’s happened—so it’s got to be changed.”
Grassley says the provision could be corrected on a “technical correction” or by a separate bill. Until that happens, Grassley says, the message is, “We screwed up. It’s got to be changed. So don’t count on this.”
AUDIO: Chuck Grassley
Iowa State University farm management specialist Steve Johnson tells Brownfield he fully expects Congress to fix their mistake.
“I have very little doubt that Congress is going to fix the 199A,” Johnson says. “It could be five or six months, but when they finally write the 2018 tax code, I don’t think 199A will be there with a 20 percent deduction just because you sold the bushels through the co-op.”
Brownfield spoke with Johnson Tuesday at a Farm Credit Services of America GrowingOn meeting in Oakland, Iowa.
AUDIO: Steve Johnson
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Why would it not immediately need to be fixed? This bill provides a very unfair trade advantage and practice for some.why would this have been passed?
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I’m an independent grain buyer and my competition has abatements, tax credits, and mandates. I buy corn they buy corn, I sell feed they sell feed, I pay around $30,000 for property tax on a $1.5m valuation, they pay around $18,000 on a $100,000,000 dollar valuation. The independent grain buyer and feed stores are being obliterated.
If it has to be fixed, why did they not attach it to the last government shut down bill?