Farm Bill Update: Taxing Matters

[underpants]

http://blog.washingtonpost.com/washingtonpostinvestigations/2008/04/farm_bill_update_taxing_matter.html

Back in 2002, then House Agriculture Committee Chairman Larry Combest (R-Texas) helped engineer tens of billions of dollars in new spending for agriculture in a massive new farm bill that was denounced by fiscal conservatives. Combest's pivotal role in outflanking a reform faction and bringing President Bush on board for the increased spending was detailed in a 2006 Post series on waste in agricultural subsidies.

This week, in an ironic twist, the current chairman of the committee, Collin Peterson (D-Minn.), has emerged as the budget hawk -- fighting to pare billions of dollars in Senate-backed spending and tax breaks in an effort to save the faltering legislation. The concern of Peterson and a bipartisan group of farm state lawmakers in the House is that Senate greed could sink the whole bill.

Peterson's main gripe is with the Senate's insistence on adding $2.5 billion in tax breaks for timber interests, conservation groups, biofuels producers, wind farmers, and others. Retired farmers selling their land could spread out capital gains over 20 years, and would be excused from paying self-employment taxes on federal payments they get for putting land in a national conservation reserve.

Even more controversial is the Senate's inclusion of the Equine Equity Act, which allows faster depreciation of race horses. Peterson warned that could help wealthy Saudi princes. But Sen. Charles R. Grassley (R-Iowa) responded that Amish farmers would be helped by another part of the act that enables them to take a long-term capital gain on workhorses held for more than a year.

It's uncertain who will blink. If the White House refuses to sign an extension, then the administration will take the blame in farm country for pushing U.S. agriculture into chaos, asserted one senior House aide. On the other hand, there is growing pressure on the Senate to back down.