A Permanent Expansion of Section 179 Included Proposed Tax Bill


by Jerry Hagstrom DTN Political Correspondent

WASHINGTON (DTN) — Congressional leaders early Wednesday released the text of the fiscal 2016 omnibus appropriations bill and a major tax bill.

The tax-relief bill, called the Protecting Americans From Tax Hikes Act of 2015, is chock-full of key provisions for farmers, equipment sellers, biofuel producers and other businesses. Here are just a few.

Equipment manufacturers and farmers buying machinery would no longer have to wonder about tax deductions. The tax bill includes a permanent expansion of Section 179, allowing small business owners to deduct up to $500,000 of equipment purchases with a phase out for companies that purchase more than $2 million worth of equipment. Section 179 deductions will also be indexed for inflation.

Beyond Section 179, the tax bill extends 50{257ecae47c7fec349321aca28547072fa2160c1991a573be7695613338f0f130} bonus depreciation for businesses for property placed in service from 2015-17 and phases it down to 40{257ecae47c7fec349321aca28547072fa2160c1991a573be7695613338f0f130} in 2018 and 30{257ecae47c7fec349321aca28547072fa2160c1991a573be7695613338f0f130} in 2019.

For larger businesses, the bill permanently extends the Research and Development Tax Credit and included enhancements for companies with less than $50 million in gross receipts.

The tax bill also permanently extends charitable contributions of land for conservation purposes. The provision extends enhanced deductions for individuals and corporate farmers and ranchers as well.

People donating charity to agricultural research have a special provision that would grant higher deduction limits.

The $1-a-gallon biodiesel tax credit is extended through 2016. The second-generation biofuel producer credit is extended for 2016 as well. A special 50{257ecae47c7fec349321aca28547072fa2160c1991a573be7695613338f0f130} bonus depreciation for cellulosic biofuel facilities is extended for 2016.

Senate Appropriations Committee Chairman Thad Cochran, R-Miss., urged approval of the Omnibus Fiscal Year 2016 funding bill, a $1.15 trillion package of all 12 annual appropriations bills that will fund government operations for fiscal year 2016 in accordance with the Bipartisan Budget Act of 2015.

The Omnibus spending bill includes several policy provisions. The legislation repeals country-of-origin labeling, noted Senate Appropriations Committee ranking member Barbara Mikulski, D-Md.

The bill, however, does not include language blocking EPA and the Army Corps of Engineers from implementing the controversial Clean Water Act rule redefining waters of the U.S. That battle will remain in the courts.

The spending bill also has a provision that reopens the farm bill by removing marketing-loan gains from the $125,000-per-person payment cap for commodity programs. The provision effectively reverts language on marketing loans back to the same rules as the 2008 crop year.

In other sectors, the bill also includes a provision lifting the 40-year ban on oil exports.

“This legislation is our best option to responsibly meet national security requirements, improve our country's infrastructure and address other public needs. We've worked on a bipartisan basis to produce a bill that will make important investments to aid our economy and promote more effective and efficient government.

“The Senate Committee on Appropriations worked diligently to approve 12 individual appropriations bills in a timely manner,” Cochran said. “It is unfortunate that the Senate did not consider those measures, but this omnibus bill builds on the Committee's work and reflects many of the priorities of the Senate as expressed to us in the thousands of requests that we received.”

The omnibus legislation maintains total discretionary funding at the same estimated percentage of GDP as in 2015, which is the lowest percentage level in at least the last decade.

The legislation does not fund more than 95 new programs or initiatives proposed in President Barack Obama's FY2016 budget request, in addition to consolidating or terminating dozens of programs throughout the budget, Cochran said. The measure also rescinds more than $5.5 billion in spending.

“The agreement includes language that repeals parts of the country-of-origin labeling law that were recently ruled discriminatory by the World Trade Organization, preventing more than $1 billion in retaliatory tariffs to the U.S. economy,” Mikulski said in an analysis.

The spending bill does not include any language blocking states from implementing their own labeling scheme for foods containing ingredients from biotech crops. Food processors, agricultural groups and others supported language that would have prevented states from creating such labels and would have created a special non-biotech labeling program at USDA, but that language was stripped from the final bill.

The agreement includes a Senate provision that effectively prohibits horse slaughter in the U.S. during fiscal year 2016 by blocking funding for Agriculture Department inspectors to preside over domestic slaughter facilities in which horses are slaughtered, Mikulski added.

“Through hard-fought negotiations on this bill, Democrats were able to successfully block all new anti-environmental provisions, including language to block efforts by the Environmental Protection Agency to ensure that waters protected under the Clean Water Act are clearly and consistently defined,” Mikulski said.

But Cochran said in his bill summary, “The bill prohibits any changes to the definition of 'fill material' and 'discharge of fill material' for the purposes of the Clean Water Act. The bill continues the prohibition on the application of the Clean Water Act to certain agricultural areas, including farm ponds and irrigation ditches.”

Mikulski also noted that Democrats negotiated successfully to keep out “language to block implementation of the president's landmark clean power plan” and “multiple provisions aimed at weakening the Endangered Species Act by substituting politics for science, including riders that affected the listing status of grey wolves, lesser prairie chicken and northern long-eared bat.”

On water and port resources, the bill provides $1.86 billion for water resources projects that provide for improvements to navigation, flood risk management and for ecosystem restoration. This amount is $223 million more than the fiscal year 2015 enacted amount and $690 million more than the request. The bill allows six new construction starts.

The bill also funds $345 million for the construction, operation and maintenance of navigation, flood control and ecosystem restoration projects along the Mississippi River and its tributaries from Cairo, Ill., to the mouth of the Mississippi River. This amount is $43 million more than the fiscal year 2015 enacted amount and $120 million more than the fiscal year 2016 budget request.

Sen. Heidi Heitkamp, D-N.D., praised the inclusion in the omnibus of a deal to lift the decades-old ban on exporting oil. The bipartisan deal — which Heitkamp noted she helped negotiate — lifts the oil export ban and includes a five-year retroactive extension of the Production Tax Credit through 2019 for wind energy, and a five year extension of the Solar Investment Tax Credit, which supports solar energy.

The bill also includes a three-year extension of the Land and Water Conservation Fund, which supports the development of outdoor recreation areas.

DTN Ag Policy Editor Chris Clayton contributed to this report.




© Copyright 2015 DTN/The Progressive Farmer. All rights reserved.



Taxes by GotCredit, on Flickr
Creative Commons Creative Commons Attribution 2.0 Generic License   by  GotCredit 

Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x