Ag Policy Blog

As DTN correspondent Elizabeth Williams highlighted in her article Friday, "Batten Down the Hatches," struggles could be ahead for agriculture as the inevitable bust follows the boom. One of the daunting figures in the article is that 25% of equipment dealers went out of business in the 1980s and the possibility that such business closures could be coming again in the next few years.

It's not exactly an upbeat article. http://dld.bz/…

That leads to an uncomfortable segue to the next item. The Senate Finance Committee on Friday rolled out a package of business tax breaks that the committee will take up on Tuesday. The plan deals with about 50 individual and business taxes that would translate into about $95.6 billion in overall tax breaks for people and companies.

Last year's tax extender package was somewhat of a mess because it passed so late in the year that the package gave no one any planning benefit. Then lawmakers refused to extend out the tax extenders to 2015 because of a momentary lapse of reason by some that Congress would dive into a comprehensive tax overhaul this year.

The big jewel here, certainly for machinery dealers, is renewing the $500,000 Section 179 deduction. The $500,000 deduction expired at the end of 2014 and fell all the way down to $25,000. Moreover, as late as Congress completed last year's extenders package, no one could really plan ahead to take advantage of the $500,000 level. Because this tax package looks to grant a two-year extension, farmers would have more time to plan and dealers would have a chance to pitch the advantages of the deduction.

The $500,000 deduction would be available to any business with taxable income at $2 million or lower. Businesses with taxable income above $2 million would see the $500,000 deduction decline on a dollar-for-dollar amount.

The bill also would extend bonus depreciation for business property put into service after Dec. 31, 2014 and would carry on through 2016 for most business equipment. This would reinstate 50% first-year depreciation for approved business equipment and machinery.

In energy, the bill also would extend the $1.01 per gallon second generation biofuel "cellulosic" tax credit through 2016. The tax credit expired at the end of 2014 as well.

The $1 per gallon biodiesel tax credit would also be extended through 2016, as would a tax credit for blending 100% biodiesel.

Companies that install blender pumps, or "qualified clean-fuel vehicle refueling property," would get to claim a 30% credit, up to $30,000 per location, for putting in such blender pumps. Ethanol, biodiesel, natural gas, compressed natural gas and hydrogen pumps would be eligible for the credit for pumps put into service in 2015 and 2016.

Second-generation biofuel producers would also qualify for special 50% bonus depreciation for any facilities put into service in 2015 or 2016.

Wind, closed-loop biomass and methane production tax credits that expired at the end of last year would also be extended through 2016.

If gloom and doom articles about the next few years also are getting to you, the Senate package also includes a reduction of excise taxes on some rum imports.

http://www.finance.senate.gov/…

Follow me on Twitter @ChrisClaytonDTN.

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