U.S. Sen. John Hoeven’s (R-ND) amendment continuing fair tax treatment for cooperatives has been incorporated into the House-Senate conference committee’s final tax relief legislation.
Sen. John Thune (R-SD) joined Hoeven in writing the amendment, which aims to ensure that elimination of the Section 199 domestic production activity deduction will not raise taxes for agricultural producers in the Dakotas and across the United States.
The Section 199 deduction was created in 2004 to relieve the tax burden on domestic manufacturing and certain other production activities. Elimination of it in the congressional draft tax bills had presented cooperatives with a potentially big problem because such action would have raised their taxes and led to higher member costs.
“We worked hard to ensure the final tax relief legislation provided certainty for cooperatives and treated them fairly,” said Hoeven, who pointed out on Dec. 16 that cooperatives provide important community and agricultural services while filling a vital role in the U.S. economy.
“I appreciate Sen. Thune, as well as our colleagues in the Senate and the House, for working with us to secure this important provision for our cooperatives,” Hoeven added.
Hoeven cited the support of Republican cosponsors of the amendment, including Sens. Cory Gardner (R-CO), Joni Ernst of Iowa, Roy Blunt of Missouri, Mike Rounds of South Dakota, Jerry Moran of Kansas, and Steve Daines of Montana, as well as Rep. Kristi Noem (R-SD) for her role in gaining House backing.
Agricultural stakeholders applauded Hoeven’s amendment as essential to producers and their communities.
Chuck Conner, president and CEO of the National Council of Farmer Cooperatives, noted Hoeven’s tireless work “to ensure that farmers and their co-ops were treated fairly.”
“The provisions that he and Sen. John Thune were able to secure in the bill will, we believe, keep money in the pockets of family farmers across the country at a time when low commodity prices mean that every penny counts,” Conner said.
Tom Astrup, president and CEO of American Crystal Sugar Company, praised Hoeven’s hard work on behalf of family farmers.
“Sen. Hoeven fought effectively to craft a good alternative to Section 199, the Domestic Production Activity Deduction, which is eliminated under the tax bill,” Astrup said. “We think the alternative will continue to provide important job-creating incentives to rural America, which is extremely important given this challenging period for the farm economy.”
CHS Inc. President and CEO Jay Debertin added that Hoeven’s leadership in the tax reform debate means that its members — both farmers and local co-ops — will continue driving economic activity in North Dakota and across their service territories.
“The Section 199 deduction helped to create jobs and broaden the tax base in many rural communities and the loss of the deduction would have had impacts far beyond agriculture,” Debertin said. “Sen. Hoeven has prevented that scenario through his efforts to make the new tax code work for co-ops and their members.”
Chris Policinski, president and chief executive officer of Land O’Lakes Inc., praised Hoeven for leading the effort to ensure that eliminating the Section 199 deduction wouldn’t have “the unintended consequence of raising taxes on producers during hard times across the countryside.”
Hoeven said on Saturday that he looks forward “to advancing this and the rest of our tax relief legislation to help grow our economy and benefit middle-class Americans, workers, small businesses, farmers and ranchers.”