Young Farmer Asks Iowa Senate to Do the Right Thing for Iowans
As farmers, we hear over and over how important it is to be involved in the political process, talk to legislators and tell our story. Finding the time to commit to that effort is the hard part with livestock, day jobs and families to care for. If you own a business, farm, or teach in the classroom the time has come for you to join in the conversation!
At the close of December 2015, small business owners and farmers across the nation breathed a sigh of relief as the federal government passed a bill to permanently provide for Section 179 small business expensing and Bonus Depreciation. We now had certainty in two key planning tools for making capital improvements to our businesses. Step two of the process when the feds finish their work, is to wait for Iowa to follow suit and “couple” those tax provisions into the Iowa code.
What nobody saw coming was our state leader, a long-time supporter of small business and agriculture, recommending that Iowa leave these essential tools out of the Iowa code for 2015 taxes. (Yes- 2015. The fiscal year that’s already passed!) That means a year of consistently monitoring financials, carefully planning purchases and doing all we could to keep our business in the black on a down year was for naught. I felt like the rug had been pulled right out from under me. A bit dramatic? Here’s why it matters to me this year in particular:
In 2014 we suffered a fire on the farm. Our grain dryer went up in flames totaling the entire unit. We waited months for the insurance company to make their evaluation and deem the fire an accident. Meaning our purchase for this critical piece of equipment had to fall in the 2015 crop year whether it was a good year to purchase it or not. (If you haven’t been following ag economy lately- the answer is NOT!) Our purchase and rebuild of our grain dryer is done, but now we must figure out how to come up with funds to cover an extra $60,000 in tax liability. Yes, with the exclusion of this tax code, the governor just asked us to write a check to the state of Iowa for just over that amount. This means we either take out a loan to pay Iowa, OR sell stored grain at an extremely depressed price just to cover this bill. Neither of which we had planned to do at this point in 2016! (Did I mention we just rebuilt the dryer that prepares our grain to be stored until we ARE ready to sell it?)
So why am I asking my Senator to help? Let’s first rewind to January 28th. The House of Representatives Ways and Means Committee put together a proposal to get Section 179 expensing back into Iowa’s Tax Code- House File 2092. On January 28th the Iowa House of Representatives passed the plan with overwhelming BI-PARTISON vote of 82-14. This bill is important to Iowa Farmers, but also includes provisions of support to other groups including:
- Deductions up to $250 for out-of-pocket expenses for teachers
- Tuition and Fees deductions for high education expenses
- Nontaxable IRA transfers to eligible charities
Last week I was asked to take part in a press conference to share my story about how Section 179 affects my small (farm) business. On the panel alongside me was a CPA, owner of a few Des Moines based fitness franchises and a teacher. During that press conference, several key points were brought up:
- The house bill only extends these provisions to January 1, 2017. Responsible business owners plan their finances (including fulfilling tax liabilities) at the beginning of each new year. If our state leadership believes decoupling is a critical part of maintaining a balanced budget, compromise on the year Iowan’s were already planning on and make your decision NOW for 2017 so we have a chance to put proper plans in place. Don’t pull the rug out on a year that’s already come to a close!
- This code is important for SMALL business. It’s easy to assume that tax codes only benefit huge farmers and big business. Research shows that those business owners and teachers utilizing Section 179 fall in lower tax brackets (lower net income levels). The very groups that these codes were created to help are the same that will be hurt the most if our Senate doesn’t move on this legislation.
- The governor is now on board! The same day as the press conference, our own Governor who first proposed a budget without coupling, voiced his favor for the House Bill. This combined with his willingness to delay the March 1 filing deadline shows all hands on board for Coupling, just waiting for our Senate’s answer.
Education, Small Business and Agriculture are some of the most important assets we have in rural Iowa communities. This is legislation that affects 177,000+ people. Senators, the ball is in your court. We’re asking you, please to do what’s Right for rural Iowa and move on House File 2092!
