Prepared Statement by Senator Chuck Grassley of Iowa
Senior Member and Former Chairman, Senate Finance Committee
Tax Reform and the Agricultural Economy
January 18, 2018
 
Nearly four weeks ago, the President signed into law the Tax Cuts and Jobs Act. It is the most sweeping reform of our tax code in more than three decades.
 
This tax reform provides both tax simplification and tax cuts for the vast majority of taxpayers.
 
Importantly, the tax reform bill made good on its commitment to provide real relief to small business owners, including family farmers and ranchers.
 
As one of only three Republican senators on both the Finance and Agriculture Committees, it was a priority of mine to represent agriculture and the family farmer throughout the tax reform debate.
 
Fair treatment for farmers under tax reform was especially important to me given the large role agriculture plays in the state of Iowa’s economy. Ag accounts for one out of every five jobs in the state, and makes up 33 percent of Iowa’s economy. 
 
Tax reform provided a once-in-a-generation opportunity to make real and long-lasting reforms for farmers, ranchers and every American working in our agriculture industries.
 
Broadly speaking, across-the-board rate reductions will let Americans keep more of their own money. This will afford farmers the opportunity to reinvest in their operations instead of sending that financial capital to politicians in Washington.
 
Tax reform legislation expands Section 179 of the tax code, which helps farmers finance overhead costs. It enables farmers to deduct more expenses in the year they are incurred, and also expands the availability of cash accounting to more farmers in Iowa and throughout the country.
 
These provisions will allow farmers to invest in the equipment necessary to do the job of feeding the nation and the world.
 
The Tax Cuts and Jobs Act lowers taxes on capital investments and includes a business income deduction, which will help level the playing field between farms that file as corporations and those that file as individuals.
 
More than 94 percent of farms are taxed under IRS provisions affecting individual taxpayers. The bulk of agricultural producers who operate outside the corporate tax code deserve basic fairness.
 
The Tax Cuts and Jobs Act makes sure that those taxed under the individual and corporate tax codes are treated about the same.
 
One of the most frequently discussed issues in the tax reform discussion is the estate tax, which can force family farms to break up their operations to pay the IRS following the death of a family member.
 
I support a full repeal of this unfair tax, but was pleased that in tax reform we were able to make significant progress in alleviating its burden on family farmers by doubling the estate tax exemption.
 
This substantial change would let more family farmers pass their hard-earned life’s work on to their children, paving the way for the next generation of family farmers.
 
According the Iowa Farm Bureau, given the price of farmland, about 30% of crop farms in Iowa exceeded the $5 million estate tax exemption in 2016 based on land values. 
 
The doubling of the exemption amount will go a long way toward alleviating the nightmare that is the death tax for many Iowa farmers. 
 
I’ve long advocated for commonsense tax relief measures because they will help Iowa and the Midwest and will make life easier for middle class Americans.
 
Farmers’ hard work provides the healthy and affordable food that we so often take for granted.
 
We should do everything in our power to support them and create an environment where these small businesses and hardworking families can thrive and prosper.
 
That’s what tax reform will do for farmers, for Iowans and for all Americans.
 
-30-