Tax Help for Ranchers Suffering from Drought Conditions

Washington, D.C. (May 13, 2004) – In passing the Jumpstart Our Business Strength (JOBS) Act this week, the Senate has approved important tax cuts for U.S. cattle producers suffering from drought conditions. Finance Committee Chairman Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) won full support with a 92 to 5 vote in the Senate. The legislation includes a provision which allows for the extended deferral of capital gains tax from drought-related sales of livestock, previously referred to as the “Rancher Help Act.”

“We are extremely pleased that the Senate has passed this tax change for cattle producers,” says Jay Truitt, NCBA executive director of Legislative Affairs. “Many of our members across the country have been suffering through drought conditions for years, and are in dire need of changes in these current tax burdens.”

NCBA has worked with members of Congress for many years to push for the passage of such legislation, requesting changes to the tax code to enhance the business climate for cattlemen. Under current tax laws, ranchers forced to reduce their herds due to historically-dry grazing lands are exempt from paying capital gains tax if they replace their herds within two years.

“The current law just isn’t working for today’s ranchers, with certain regions seeing drought conditions year after year,” says Truitt. “There seems to be no relief in sight, and the added tax burden is crippling. The changes this legislation makes to tax law will be a dramatic improvement for those trying to save their livelihood during long-term, unexpected, and irreversible drought conditions.”

Another provision in the bill would give tax credits to cattle producers who produce electricity from renewable resources like livestock waste nutrients.  The credit is 1.8 cents per kilowatt hour of electricity produced.  This gives an opportunity for producers to turn bottom line expenses into a profit.  Anaerobic digesters and other types of technology have been used to create electricity.

“We urge members of the House to include these important provisions in the House version of the tax bill, or to ensure that the Senate provisions are kept in conference,” says Truitt.

NCBA will continue to push for final passage of these importance tax code changes for producers.