By Stephen Coye
There are few things that most Americans agree on these days, but one of them is that our tax code is a mess – and a huge problem for most Americans.
From the presidential campaign trail to dinner tables in small-town America, people have been calling for a major overhaul of the federal tax code. Finally, we are beginning to see some positive developments on this front, with congressional leaders unveiling their tax reform package. But the progress can’t stop there – Congress must continue to push forward and pass broad tax reform legislation as soon as possible.
Doing so would be good news for anyone in rural New York or one of our many small towns upstate. A comprehensive tax reform package will help generate the kind of economic growth and private-sector investment that will be felt by rural and small-town New Yorkers – but only if done right. This is a once-in-a-generation opportunity to simplify the tax code, make it fairer for rural America and small businesses, and help U.S. companies of all sizes be more competitive in the global marketplace.
The biggest impediment to growth in the federal tax code is the business tax rate, which is the third highest in the world, and the highest among industrialized nations. What this means in the real world of rural and small-town New York is that nearly every business, agricultural or not, goes up against international competitors at a significant competitive disadvantage.
This translates into sluggish growth, languishing wages and tepid job creation across the United States, including in rural America.
These things can all be addressed with a significantly lower tax rate. But looking beyond our borders, lower tax rates will improve U.S. business competitiveness against international rivals, bring offshore taxes back home and increase domestic investment. Most would also agree that cutting rates for individuals and families would complement and amplify these positive effects, which is why Congress should seek to lower both business and personal rates.
In addition, those in the agriculture industry know that commodity prices fluctuate, and crop yields can vary greatly from year to year. Despite considerable upfront investments, years often go by before seeing substantial returns. For this reason the National Grange supports cash accounting – being taxed on production and what is brought to market instead of on investments. This absolutely must be preserved, as should the mortgage interest deduction on land purchases and production inputs. And finally, we hope any reforms remove the burdensome “death tax” that makes it nearly impossible in many cases for farmers and ranchers to pass on their legacies to their children.
Time is of the essence on this issue. Now that a plan is in place, it’s time for Congress – including all members of the New York congressional delegation – to draft actual legislation and get it passed and signed by the president as soon as possible. Upstate farmers, as well as the rural and small-town communities who depend on them, cannot afford to wait any longer.
Stephen Coye is president of the New York State Grange.