Mr. President, I rise today to introduce, along with my good friend, Senator Baucus, to introduce the Tax Empowerment and Relief for Farmers and Fishermen Act, which I will refer to as the ``TERFF Act.'' I am pleased that Senators Roberts,…
Mr. President, I rise today to introduce, along with my good friend, Senator Baucus, to introduce the Tax Empowerment and Relief for Farmers and Fishermen Act, which I will refer to as the ``TERFF Act.'' I am pleased that Senators Roberts, Brownback, Lincoln, Burns, Craig, Crapo, Fitzgerald, Hagel, and Dorgan are joining Senator Baucus and me as cosponsors of this important legislation.
I am a farmer, like my father was before me. I understand farming and how policy decisions from Washington impact hardworking farmers, like my son Robin. Before I ran for elected office and after I leave, God willing, I'll still be farming. There is little that I feel more strongly about than providing the agriculture community with the potential to survive and to thrive. As far as I'm concerned, agriculture is my ``turf'' and as long as I'm in this town, I'll do all I can to serve my friends and neighbors in the agriculture community.
This legislation has already been adopted by the Senate multiple times. In the midst of a serious downturn in the agriculture economy, it seems to me we ought to be doing everything we can to help farmers, and this would provide significant assistance.
First, this legislation includes Farm, Fish, and Ranch Risk Management Accounts. These farmer saving accounts would allow farmers to contribute up to 20 percent of their income in an account, and deduct it in the same year. Farm accounts would be a very important risk management tool that will help farmers put away money when there's actual income, so that, in the bad times, there will be a safety net. This measure has strong bipartisan support and was actually sent to President Clinton, who vetoed it.
In addition, this legislation would exempt Conservation Reserve Program payments from self-employment tax. Under current law, farmers who participate in the CRP are unnecessarily struggling during tax season because of a case pushed by the IRS. The latest 6th Circuit court's ruling treats CRP payments as farm income subject to the additional self-employment tax rate of 15 percent.
Senator Brownback has taken the lead on fixing this problem. This unfair tax not only ignores the intent of Congress in creating the CRP, it discourages farmers from using environmentally pro-active measures. At a time when farmers are struggling to regain their footing economically and do the right thing environmentally, it's important that Congress support them by upholding its promise on CRP.
In addition, Senator Lugar has led the effort to expand the current program that allows companies to donate to food banks, so that farmers and restaurants can also donate surplus food directly to needy food banks. This will be a win for the farmers and a big win for people who depend on food bank assistance.
In addition, when we passed income averaging for farmers a few years ago, we neglected to take into account the problem of running into the alternative minimum tax, which many farmers are facing now. My bill will fix this growing problem.
My bill also expands opportunities for beginning farmers who are in need of low interest rate loans for capital purchases of farmland and equipment.
Current law permits State authorities to issue tax exempt bonds and to lend the proceeds from the sale of the bonds to beginning farmers and ranchers to finance the cost of acquiring land, buildings and equipment used in a farm or ranch operation.
Unfortunately, aggie bonds are subject to a volume cap and must compete with big industrial projects for bond allocation. Aggie bonds share few similarities to industrial revenue bonds and should not be subject to the volume cap established for industrial revenue bonds.
Insufficient allocation of funding due to the volume cap limits the effectiveness of this program. We can't stand by and allow the next generation of farmers to lose an opportunity to participate in farming because of competition with industry for reduced interest loan rates.
In addition, the IRS recently determined that some cooperatives should be exposed to a regular corporate tax due to the fact that they are using organic value-added practices rather than manufactured value- added practices. This is unfair, and needs to be fixed.
It is also imperative that we not neglect the difficulties many producers are facing in light of persistent drought conditions. Under current law, a producer who loses livestock, or is forced to sell livestock, or is forced to sell livestock, is required to replace that livestock within two years. However, some parts of the country have already experienced two years of drought with no end in sight.
It goes against common sense for these producers to replace livestock until conditions improve. My legislation would extend the 2-year deadline to 4 years.
And of course my package wouldn't be complete without a provision leveling the playing field for ethanol producers.
The Small Ethanol Producer Credit will allow small cooperative producers of ethanol to be able to receive the same tax benefits as large companies. This provision provides cooperatives the ability to elect to pass through small ethanol producer credits to its patron.
The ``TERFF'' package will do more to reform taxes for the American farmer than any other measure in recent memory. I urge my colleagues to strongly support this measure.
I ask unanimous consent that the text of the bill be printed in the Record.
Mr. President, the American people recognize the importance of the family farmer to our Nation, and the need to provide an adequate safety net for family farmers. In recent years, however, assistance to farmers has come under increasing scrutiny.
Critics of farm payments have argued that the largest corporate farms reap most of the benefits of these payments. The reality is, over 60 percent of the payments have gone to only 10 percent of our Nation's farmers.
What's more, farm payments that were originally designed to benefit small and medium-sized family farmers have contributed to their own demise. Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices, driving many family farmers off the farm.
The Senate agreed, by an overwhelming vote of 66 to 31, to a bipartisan amendment sponsored by Senators Dorgan and myself to target federal assistance to small and medium-sized family farmers. The amendment would have limited direct and counter-cyclical payments to $75,000. It would have limited gains from marketing loans and LDPs to $150,000, and generic certificates would have been included in this limit. That would have limited farm payments to a combined total of $275,000.
That amendment was critical to family farmers in Iowa. I feel strongly the farm bill failed Iowa when it failed to effectively address the issue of payment limitations. This is our chance to remedy the problem.
This bi-partisan legislation provides a limit of $40,000 for direct payments, $60,000 for counter-cyclical pavement, and $175,000 for LDPs and marketing loan gains. The combined limit is $275,000.
I urge my colleagues to support this bi-partisan legislation and to encourage the development of reasonable, legitimate payment limits.
I ask unanimous consent the text of the bill be printed in the Record.