[Congressional Record Volume 143, Number 10 (Thursday, January 30, 1997)]
[Senate]
[Page S890]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SHELBY (for himself, Mr. Grassley, Mr. Cochran, Mr. 
        Roberts, Mr. Abraham, and Mr. Hutchinson):
  S. 251. A bill to amend the Internal Revenue Code of 1986 to allow 
farmers to income average over 2 years; to the Committee on Finance.


                 farmer's income averaging legislation

 Mr. SHELBY. Mr. President, today I am introducing 
legislation--along with Senators Grassley, Cochran, Roberts, Abraham, 
and Hutchinson--which will restore to American farmers an important 
tool in meeting their Federal income tax obligations.
  Mr. President, America would not be what it is today without the 
dedication, sacrifice, and hard work of the American farmer. The 
American farmer is the most efficient farmer in the world. Each farmer 
in America provides food and fiber for 94 people in our country and an 
additional 35 people abroad. As a result, Americans enjoy the most 
affordable, healthy, and stable food supply of any country in the 
world.
  Yet, despite the successes of the American farmer, they are faced 
with unique and difficult barriers, they must overcome, including 
unpredictable weather, natural disasters, plauges of insects and 
diseases, and excessive Government regulations. All of these result in 
substantial income fluctuations for the average farmer.
  Wide swings in farmers' income from year to year, result in a tax 
burden much higher than individuals with a stable source of income 
because surges in income are taxed at a higher rate than is a steady 
flow of income. This problem is compounded when a farmers income is 
exaggerated by the sale of land or other assets.
  Prior to 1986, farmers were allowed to average their income over a 2-
year period in order to give them some sense of regularity and 
predictability in their payment of Federal taxes. This provision was 
repealed as part of the 1986 Tax Act, which reduced the number of tax 
brackets and lowered the top rate of 28 percent. However, since 1986, 
Congress has added two new tax brackets, and increased the top rate to 
39.6 percent.
  This change, along with the move to a more market-oriented farm 
program, makes it imperative that Congress restores to farmers the 
ability to average their income, and the legislation I am introducing 
today will do just that. The Joint Committee on Taxation estimated last 
year that this bill would cost about $90 million over 5 years.
  Representative Nick Smith has sponsored an identical bill in the 
House, and it has the broad support of the farming community. Groups 
endorsing this proposal include: Alabama Farmers Federation, American 
Farm Bureau Federation, National Association of Wheat Growers, National 
Cattlemen's Beef Association, National Farmers Union, National Grain 
Sorghum Producers, National Grange, National Pork Producers Council, 
and Women in Farm Economics.
  Mr. President, the success of our Nation depends in large part on the 
success of the American farmer. Until we can enact broad-based tax 
reform, we should provide farmers with some sense of regularity and 
predictability in meeting their Federal tax obligation. This 
legislation will do that, and I hope my colleagues will support 
it.
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