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Section 199A mishap threatens small businesses
Story Date: 3/22/2018
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Source: POLITICO'S MORNING AGRICULTURE, 3/21/18
Paul Kroeker can't believe that "ineptitude" on Capitol Hill may just put him out of business. Kroeker owns an independent grain elevator and lumber company in Henderson, Neb., that handles about three million bushels of corn and soybeans each year. But the new Section 199A language in the Republican tax law has hurt him immensely as he tries to compete with three grain cooperatives in his area.
Already costing money: For the 2017 crop, Kroeker has lost 30 percent of his business from corn growers because farmers just can't turn down the lucrative deduction they get when selling to co-ops over other types of businesses. Some producers could be able to write off their income entirely.
"The longer this drags on, the more business I lose," Kroeker told Pro Ag's Catherine Boudreau in an interview on Tuesday. "It will be a catastrophe for businesses my size."
Legislative hold up: Congressional leaders have been trying to include a fix to the so-called grain glitch in the fiscal 2018 omnibus spending package, but House Speaker Paul Ryan said Tuesday he opposed Senate Democrats' demands that a low-income housing tax credit be expanded in exchange. Plans to roll out the spending package were derailed late Tuesday after congressional leaders failed to reach agreement on a number of disputes. Among the roadblocks: how to fix "fire borrowing," in which federal agencies must dip into other funding accounts for firefighting and prevention, instead of receiving emergency dollars like the response to hurricanes.
Meanwhile, businesses like Kroeker's hang in the balance, and he is frustrated that fixing the Section 199A deduction has become a political bargaining chip. "There's been a lot of tears in my household," he said, noting that he has traveled to Washington to bend the ear of Nebraska's congressional delegation and members of the House Ways & Means Committee - most recently last week. He has also tweeted hundreds of times to get their attention.
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