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Farm Bill Tax Provisions Anger Republicans

by Mike Godfrey, Tax-News.com, Washington

02 August 2007


House Republicans have expressed anger at a last minute provision tacked onto an agricultural bill that threatens to increase taxes for US companies with domestic and foreign subsidiaries.

Republicans had initially supported the farm bill, which, among other measures, proposed to increase funding for the Emergency Food Assistance Program, but abruptly withdrew their support when Democrats included a tax increase on “insourcing” companies operating inside the United States to help pay for the provisions.

“At the beginning of the week, I stood beside the Chairman of the Agriculture Committee to voice my support for this bill that we had worked in a bipartisan fashion to bring to the floor. I had only one caveat: that the offsets not be in the form of tax increases," said Rep. Bob Goodlatte (R - Va) in a statement.

"Not 24 hours before we were to consider this bill on the Floor, we were made aware of a tax increase provision that had been added to this language behind closed doors. Unfortunately all of the good things contained in this bill have been overshadowed by very partisan elements of what should be a bipartisan bill,” he added.

According to Republicans, the tax provisions added without the consultation of the Agriculture Committee would raise taxes on companies with US subsidiaries, affecting firms responsible for the employment of more than 5 million Americans. They contend that the provisions would make the US a less hospitable place to do business, discourage future investment, and drive jobs abroad. The GOP also warns that the measure will open the way for retaliation on US companies operating on foreign soil because they are part of numerous treaties that allow reciprocal treatment on taxes for US companies with foreign subsidiaries to avoid double taxation.

“I am disappointed that the traditionally bipartisan farm bill was bogged down with a tax increase that had no business being in a bill that is supposed to be about agriculture, conservation, nutrition, energy, and rural development and should have been fully funded through fair treatment in the normal budget process," Goodlatte continued.

Before the tax provisions had been attached to the bill, it had received the unanimous approval of the House Agriculture Committee. The bill then went to the House floor where is was approved by a vote of 231 to 191.

"The farm bill was shortchanged in that process and the way to fix it is not with a tax increase. The bill as it stands pits America’s farmers and ranchers against American workers and relying on tax increases to fund a farm bill is the wrong way to go," he concluded.


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