Source: POLITICO'S MORNING AGRICULTURE, 10/25/17

The National Council of Farmer Cooperatives will announce today that it is opposed to congressional Republicans' proposal to eliminate the Section 199 deduction, which is part of their broader framework for overhauling the tax code. The deduction - one of the few mentioned by name in the GOP's framework - is a 9 percent tax break for most manufacturers, Pro Ag's Catherine Boudreau reports. Those who benefit include agricultural co-ops like Land O' Lakes, American Crystal Sugar and Blue Diamond, which are represented by NCFC. But the majority of co-ops have been passing on the benefits directly to their farmer members, returning an estimated $2 billion annually to communities across the country, according to the industry trade group. 

"It's a popular deduction across a diverse range of business sectors, but I think many sectors have determined that if the corporate tax rate is reduced, that will more than compensate them for losing the Section 199 deduction," said Chuck Conner, president and CEO of NCFC, referring to the Republican's plan to reduce the corporate tax rate from 35 to 20 percent. "In the case of cooperatives, we would get little to no benefit."

Conner said eliminating the Section 199 deduction runs counter to Congress' fundamental goal of putting more money in people's pockets to spur economic growth. "Farmers will have less money to invest," he said. "Most members of Congress would say that's not what they want to do." 

What's the latest on tax reform? Beyond Section 199, the GOP framework says that "numerous other special exclusions and deductions will be repealed or restricted" to generate revenue and pay for tax rate cuts, a feat that is likely to be supremely difficult. On Tuesday, the proposed elimination of a federal deduction that people apply to state and local taxes was in the cross hairs, reports POLITICO's Rachael Bade, Sarah Ferris and Aaron Lorenzo. A handful of New York Republicans are threatening to vote against the budget on Thursday - a key hurdle Congress must jump to get to tax reform - unless leadership retreats from that plan.