New Rally Cry From the National Potato Council: No New Taxes!
September 21, 2022 Growers and consumers are experiencing record-setting inflation as a consequence of supply chain disruptions and government overspending. The reactions to it may tip the U.S. economy into a recession (if we aren’t there already).
Panicked “solutions” to this reality — just months from a midterm election — are pouring out of Washington, DC. One high-ranking member of Congress recently suggested that more government spending was necessary to help consumers deal with high prices. The irony was lost on him, but not many others, that the firehose of government spending was likely one of the causes of the problems we’re now facing.
Farms Are Big Business?
To add to the pain, increased taxes on “big business” would pay for this new spending. What they don’t disclose is that their definition of “big” almost always includes family farms reeling with crushing inflationary input costs.
To date, multiple proposals would rely on tax increases on family-owned-and-operated farms. To this, the National Potato Council (NPC) has a clear message to Washington: No new taxes on our struggling farms.
NPC’s board of directors drew this line in the sand during its annual meeting in February when it formally adopted a position opposing new taxes such as repealing existing exemptions that would increase capital gains tax rates, increasing taxes on appreciated assets, or eliminating stepped-up basis upon death of a farm owner.
Over the past couple of years, NPC and its partners in the agriculture community fought off numerous attempts to fund federal spending on the backs of family farms. Now, some in DC are attempting to resurrect those previous failures to increase taxes; however, NPC isn’t wavering from its members’ strong, common-sense statement to protect the future of their operations and the rural communities they support.
What to Watch For
Two new tax increase efforts have recently come under scrutiny. The first recommends expanding the 3.8% Net Investment Income Tax (NIIT) to individuals and families who actively participate in their business. While expanding the NIIT is sometimes characterized as closing a tax loophole, the fact is when the NIIT was created, it was meant to only apply to investment income. The business income of small business was specifically and intentionally exempted, and in no way constitutes a loophole.
A second proposal would limit the ability of small, individually, and family-owned businesses to fully deduct their losses during an economic downturn by expanding and extending the so-called “excess business loss limitation” for “noncorporate taxpayers.”
NPC has pointed out that expanding the NIIT would raise taxes on small and family-owned businesses when they are profitable, while extending and expanding the “excess loss limitation” rules would hurt them in the next downturn, increasing the odds that they don’t survive the next economic calamity.
Combined, while these two tax increases would add more than $400 billion over 10 years to the federal coffers, the funding would be shouldered entirely by small, individually, and family-owned businesses.
If tax changes like these somehow slip through, the economic harm they will cause will have a lasting impact on rural America and the consumers who rely on our products to feed their families.
Fight for a Fair Tomorrow
As we stare into the face of a recession, with inflation levels we haven’t experienced in four decades, continued unprecedented supply-chain challenges, and chronic labor shortages throughout the food supply chain, proposals to raise taxes on small and family-owned businesses should never see the light of day.
NPC will continue to oppose any and all proposals that would eliminate or undermine tax provisions necessary to keep family farms competitive and protected from being broken up or shuttered. It’s never a good idea to raise taxes on small businesses but, with the economy teetering and inflation running rampant, now is a terrible time to impose additional burdens on those working to keep food on America’s grocery shelves.
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