With the state legislature and Congress back in full session, Ohio Farm Bureau’s policy department has been busy examining various proposals that impact agriculture such as taxes, water quality and nutrient application. That means testifying at hearings, having one-on-one meetings with lawmakers and talking with university, business and various ag groups on how these proposals affect them.
Here’s a look at some notable bills introduced in Ohio and in Congress by Ohio congressmen, as well as Gov. John Kasich’s tax proposals.
Senate Bill 1 This bill is a new version of House Bill 490, an algae-related bill that didn’t move at the end of last year because of unrelated amendments in it. The bill is sponsored by Sens. Randy Gardner, R-Bowling Green, and Bob Peterson, R-Sabina. Among the bill’s highlights:
A ban on the application of fertilizer and livestock manure to frozen and snow-covered ground in the Western Lake Erie Basin.
Phosphorus monitoring at water treatment plants.
Updated sewer rules.
A ban on open-lake disposal of dredged material from ports and harbors in Lake Erie.
Farm Bureau will testify on the specifics of this legislation in the next few weeks. In addition, Ohio Farm Bureau provided testimony before both the Ohio House and Senate Ag committees detailing the voluntary measures farmers and agribusinesses have been taking to address water quality concerns. Their financial commitment, along with Ohio State University and other ag groups, is millions of dollars and “clean water cannot come at the expense of food production nor can farming trump the need for clean water,” according to OFBF’s testimony.
Section 179 Small Business ExpensingOhio Congressman Pat Tiberi recently reintroduced a bill that would make permanent the Section 179 levels effective during the 2010-2014 tax years. That would allow taxpayers to expense up to $500,000 in investments in property, equipment and computer software with the deduction phased out after investments exceed $2 million. Right now, if no changes are made, the expensing levels will drop to $25,000 with a $200,000 phase-out starting Jan. 1. The House Ways and Means Committee this week approved the bill, which is supported by Farm Bureau. Estate Tax
This week, Ohio Congressman Bob Latta reintroduced legislation to permanently repeal the federal estate tax. Better known as the death tax, this is a tax on an individual’s right to transfer property at his or her death. Farm Bureau supports this bill.
GOVERNOR’S BUDGET PROPOSALGov. John Kasich has released his recommendations for the state’s two-year operating budget, including continued tax reform measures. Changes include across-the-board cuts for all income taxpayers and targeted small business income tax cuts. These would be paid for with increases in the sales, commercial activity tax (CAT), severance and tobacco taxes. Ohio Farm Bureau will be comparing the proposals with findings of the organization’s recently completed comprehensive tax study to understand their full impact on agriculture. Below is a summary of some of the tax recommendations.
Income Tax A new small business tax deduction for 100 percent of all business income from firms with less than $2 million in annual gross receipts. This includes sole proprietorships or pass through entities such as partnerships, S-Corps. and LLCs.
Across-the-board income tax cut of 15 percent and 8 percent in tax years 2015 and 2016, respectively.
Increase personal exemptions from $2,200 to $4,000 for taxpayers earning less than $40,000, and from $1,950 to $2,850 for those earning between $40,000 and $80,000.
Sales TaxIncrease the state sales tax rate by 0.5 percent.
Expand the sales tax base to services not previously covered including lobbying, market research/opinion polling, public relations, management consulting and debt collection services. All ag-related exemptions would be preserved.
Commercial Activity TaxIncrease the commercial activity tax (CAT) rate on taxable gross receipts of more than $1 million from the current 0.26 percent to 0.32 percent beginning in fiscal year 2016.
Increases incurred by ratepayers with gross receipts between $1 million and $2 million would be partially offset by a reduction in the Annual Minimum Tax for that group.
Severance TaxKasich has proposed enacting a tax on high-volume horizontal wells on severances of oil, gas, condensate and natural gas liquids.
The basic tax rate proposed is 6.5 percent on the volume of oil or gas multiplied by spot prices at the exchanges where these commodities are traded.
For commodities such as natural gas liquids (ethane, butane), a lower tax rate of 4.5 percent would be applied to reflect the additional processing costs incurred in separating natural gas liquids from the dry gas.
20 percent of the new severance tax revenue on horizontal wells would be earmarked for local governments for infrastructure and economic development purposes.