Kansas Farmers Union is watching Washington with concern

Congress has passed tax reform and the president has signed it into law, but the details are just starting to be written. Volumes of regulation are about to be drafted, scrutinized and litigated. The impact of which will be felt far and wide. With this in mind, Kansas Farmers Union is watching Washington out of concern of further harm from an already harmful tax reform exercise. The activity we’re seeing today is alarming.

Corporations are the largest beneficiaries of the new tax law. The rate cuts they enjoy are permanent, while rate cuts for individuals, small businesses and others are temporary. The percentage cut received by corporations far surpasses that of other businesses and individuals. Yet for some reason, they appear to be dissatisfied. I say this because multinational grain corporations are now attacking tax provisions designed to help our country’s cooperatives.

This latest form of tax reform, certainly on a percentage basis, mostly benefits the largest and most well-to-do individuals and businesses. Deductions that agriculture previously enjoyed, for the most part, just got larger, ensuring that only the biggest farmers would derive any additional benefit from the tax cut. There were, however, a couple of exceptions, most notably the deduction for Qualified Business Income or Sec. 199a. The credit provides a 20 percent deduction for qualified business income and a 20 percent deduction for qualified cooperative dividends.

Faced with the removal of deductions for cooperatives and a massive tax cut for corporations, cooperative-friendly senators successfully inserted Sec. 199a to move a step closer to equity. The alternative would have landed a severe blow to cooperatives. KFU has long understood the importance of cooperatives. They dot the landscape across our state. No county is without at least one. They exist with the mission to serve their member-owners. They are led by our neighbors. When earnings are reinvested they go directly back to the communities they serve. When members receive dividends, it helps power our local businesses. Cooperatives don’t answer to far-away investors.

KFU has a long and proud history of building and supporting our state’s cooperatives. This brings us back to the tax code and corporate attempts to repeal 199a. Equity between the tax treatment of cooperatives and corporations is still not even. Corporations have a significant leg up. But competition for a farmer’s business is a good thing and there is place for both types of entities in our economy. But it represents the worst instincts of corporate America to try and further disadvantage competitors using their muscle and resources in Washington instead of competing in the field to increase market share.

ADM and Cargill made $2.6 billion and $1.64 billion in operating profits last year respectively. They also just received one of the largest tax cuts in their history. Is that not enough? Businesses exist to make money. Profits are not a bad thing, but the type of behavior corporations are engaged in towards cooperatives is. For this reason, we call on the Kansas congressional delegation to protect cooperatives through support for Sec. 199a and we urge additional equity by making this credit permanent.

— Donn Teske, president of Kansas Farmers Union