For the past year, NCBA has been working with the staff and leaders of the House Ways & Means Committee and the Senate Finance Committee to create legislation that will bring the U.S. tax code into the twenty-first century.
Tax reform is a priority for NCBA because our membership is comprised of family-owned small businesses who want to compete in the global market place without government support or interference. Unfortunately, our current tax code is broken and does little to promote economic growth. Even worse, it looks like true tax reform will probably be unachievable until next year due to partisan quarrels and the 2014 election season.
Prior to Wednesday’s press conference by Ways & Means Chairman Dave Camp (R-Mich.), both Speaker of the House John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ken.) expressed serious doubts that any meaningful tax reform can be achieved prior to the November elections.
In spite of the disappointing news from Republican leadership, Chairman Camp decided to move forward with the unveiling of his comprehensive tax reform plan also known as the “Tax Reform Act of 2014”.
While many headlines will concentrate on the reduction of income tax rates and the elimination of the dreaded Alternative Minimum Tax, the legislative proposal itself is 979 pages, and instead of going page-by-page, I have highlighted a few areas that are of concern to NCBA.
Section 3301, Limitation on Use of Cash Method of Accounting: “Under the provision, businesses with average annual gross receipts of $10 million or less may use the cash method of accounting; whereas businesses with more than $10 million would be required to use accrual accounting.
The provision would not apply to farming businesses, which would continue to be subject to current-law accounting rules.”
NCBA’s Position: It is an understatement to say that we fought hard to make sure that agriculture could continue operating under cash accounting rules. Moving agriculture into accrual accounting would be devastating to our industry, especially our feedyard sector.
Section 3111, Expensing Certain Depreciable Business Assets for Small Business: “Under the provision, Code section 179 expensing would be made permanent at the 2008-2009 levels. Taxpayers would be able to expense up to $250,000 of investments in new equipment and property per year, with the deduction phased out for investments exceeding $800,000 (with both amounts indexed for inflation).