WASHINGTON, D.C. — Negotiations over a $3.5 trillion budget reconciliation bill have been heating up in Congress this week.
The package would pump funding into education, healthcare, environmental programs and various industries, mostly paid for through tax increases.The budget reconciliation plan also includes $66 billion for agriculture, forestry and rural development.
While many farm groups say the bill has some measures favorable to agriculture, such as research funds, others warn that it includes proposed changes to the estate tax exemption.
Republicans and moderate Democrats say the spending package could increase the nation’s inflation rate and debt, while progressive Democrats say the spending is a critical long-term investment.
It isn’t clear yet whether the bill will pass Congress, as it faces resistance from centrist lawmakers, including West Virginia Democratic Sen. Joe Manchin.
If the bill does pass, what does it have to do with agriculture?
Members of the House Agriculture Committee Monday voted along party lines to advance nearly $66 billion in spending — $40 billion for forestry programs, $18 billion for rural development and $7.75 billion for agricultural research initiatives.
Debate continues over a potential additional $28 billion for “climate-smart” agriculture programs.
The $40 billion earmarked for forestry includes $14 billion in funding for hazardous fuels treatments, forest restoration, vegetation management and firefighting. It also includes millions of dollars in payments to forest owners and operators for implementing “climate-smart practices.”
The rural development section includes investments in rural electric co-ops, renewable energy, biofuels and the Rural Energy for America Program, or REAP, which provides farmers with grants and loans to make energy efficiency improvements.
The agricultural research portion includes scholarships, grants, USDA program funding and investments in land-grant universities.
Farm groups initially had serious concerns about the bill, which originally included proposals to tax capital gains at death and to eliminate the stepped-up basis.
If a farmer decides to sell property he inherited, a stepped-up basis allows him to pay capital gains taxes only on a property’s increase in value since it was inherited rather than from the time it was purchased by a parent.
“This would be devastating to American agriculture,” Oregon Farm Bureau said prior to the vote. “Now is not the time to impose a massive new tax that could put families out of business.”
Farm groups across the nation joined the outcry, calling on Congress to protect the stepped-up basis.
Lawmakers Monday debated the topic for hours. In the end, the proposal failed.
Ag groups, though happy the stepped-up basis was preserved, are still concerned over other tax language, particularly a proposal to shrink the current estate tax exemption — potentially tripling the number of Americans paying the estate tax.
“We are very pleased to see that the House Committee did not include the elimination of stepped-up basis within its initial text,” National Corn Growers Association president John Linder said in a statement. “However, we are concerned with the provisions on the estate tax in the committee draft that could impact family farms.”