Date: 1983-03-08
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Speaker. I rise in support of H.R. 1290. as reported by the Committee on Ways and Means. H.R. 1296 removes concerns by many farmers regarding the taxation of commodities received by producers under the recently announced PIK program of the Department of Agriculture. This program provides for payments in the form of commodities as compensation for the diversion of acreage in 1983 from the production of wheat. feed grains. upland cotton. and rice to conservation uses. The Department has undertaken the program as the most effective tool Immediately available to deal with the excess supply problem currently facing the farmers of the United States. This excess supply has contributed to a reduction in net farm income to the lowest levels since the days of the depression of the 1930s. and no substantial improvement in this picture is anticipated during 1983. The USDA. for example. has estimated that net farm income fell from $25 billion in 1981 to $20.4 billion in 1982 and may range between $16 and $20 billion in 1983. The Department Is also predicting that the value of agricultural exports may be down 8 percent in the current fiscal year. We cannot tell whether the PIK program as currently designed will work as well as the administration hopes to reduce crop surpluses but we do believe that in the interest of farmers. taxpayers and consumers we must do what we can to give the program a fair chance to work. This means that we must try to eliminate obstacles to participation in the programand we must get the job done. if possible. before signup In the program ends Thus far. the tax concerns of producers have been a serious impediment to their participation in the program. Unless current law is changed the program may not have a fair chance to succeed. To this end. I have sponsored legislation to make the necessary changes in the tax laws and many Members of the House from agricultural districts have sponsored comparable legislation to provide equity under the tax laws. H.R. 1296 under consideration today makes the necessary changes in the tax laws. Under current law farmers who receive PIK commodities must consider them as taxable income at the time the commodity becomes available to the producer. This discourages farmers from participating because they face the prospect of paying taxes on products from which they have not received any cash. In addition It would mean for many farmers that income taxes would be due for two crops within 1 tax year. H.R. 1296 permits farmers to defer payment of income taxes on commodities received under the PIK program until those commodities are sold. thereby allowing farmers to treat commodities for tax purposes in the same manner as those they produce themselves. In addition. H.R. 1296 specifies that farmland removed from production under the PIK program for 1983 would continue to be valued as active farmland for estate tax purposes. This means that the land would be valued at the current use value instead of the high fair market value and that estate taxes could be paid over a 14year period instead of within 9 months. Immediate action on this legislation is necessary. I encourage my colleagues to join me in support of this legislation. I wish to conclude my remarks by expressing my appreciation to chairman ROSTENKOWSKI. to PETE STARK. chairman of the subcommittee and to the other members of the Ways and Means Committee for the courtesies they have extended me and for their cooperation in expediting floor consideration of the bill. They could not have been more helpful.e