It is therefore difficult to devise a tax credit that will adequately compensate farmers and ranchers for donated easements, limiting their effectiveness. Farm Profitability and Land Use Farms and ranches that are profitable will remain in agriculture therefore preventing changes in land use. Farmers and ranchers must deal with volatile income swings that result from unpredictable weather and markets. Tax code provisions that allow the matching of expenses with income are of great help. Repeal of the alternative minimum tax would simplify the tax system for farmers and ranchers and allow them to more effectively manage their tax burden.
Cash accounting is an important financial management tool.
Recent changes to allow income averaging have been helpful. Many other tax law changes would help farmers and ranchers stay on the land and reduce the potential for the land to shift to other uses. Two Farm Bureau priorities are allowing for the full deductibility of health insurance premiums paid by the self-employed and increasing the amount that small businesses can expense each year. This Subcommittee faces a major challenge in considering the impact of federal tax policy on land use. Current tax law has a major impact on land conservation because the overall tax load is large enough to cause landowners to seek legal means to reduce that tax load.