[Congressional Record Volume 143, Number 17 (Tuesday, February 11, 1997)]
[Senate]
[Pages S1243-S1244]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 RESTORING INCOME AVERAGING FOR FARMERS

 Mr. HAGEL. Mr. President, today I am cosponsoring S. 251, a 
measure that will provide farmers and ranchers with a valuable tool--
income averaging--to help manage their agricultural operations, improve 
profitability, and reduce the tax burden on a crucial Nebraska 
livelihood. I commend Senator Shelby, the bill's principal sponsor, for 
his leadership on this matter.
  Today's Federal Tax Code is hardly a friend to the family farmer.
  For example, farmers and ranchers do not have access to company or 
government pensions and retirement plans, in which many other Americans 
have the ability to participate. Farmers and ranchers will receive 
fewer Social Security benefits than workers in most other careers since 
they plow much of their income back into the farm And, as self-employed 
workers, farmers and ranchers are charged with payroll taxes that are 
nearly double that of most any other private business employee. Even 
retirement can be a painful proposition for agricultural producers who 
have spent their lives building a security nest egg only to be faced 
with onerous capital gains tax rates and, later, with a confiscatory 
estate tax when they want to pass their farm along to their children.
  The American consumer still enjoys the most plentiful food supply at 
the lowest cost in the developed world--thanks to our Nation's 
agricultural might. Population growth, rising per capita incomes, 
expanded trade opportunities, along with new production and marketing 
technologies, are a few of the reasons why the future of American 
agriculture is so bright. However, flexibility in our U.S. Tax Code is 
still needed to strengthen our position as the world's leader in 
production agriculture.
  Before 1986, agricultural producers were allowed to average their 
income over a 2-year period, which allowed greater flexibility in both 
profit potential and management decisions. This

[[Page S1244]]

tax management tool was repealed in the 1986 tax reform bill, but the 
need for this instrument to reduce the farm tax burden still remains.
  A fairer and more equitable tax policy will also have a profound 
effect upon the creation and sustainment of jobs in rural America. The 
economic vitality of our rural communities continues to hinge on the 
success of our agricultural industry. A prosperous rural economy means 
greater opportunities for the local men and women who sell the farm 
implements, drive the grain and livestock trucks, deliver the feed and 
fuel, market the seed and fertilizer, and process the fruits of our 
harvest so as to maintain our position as the world's most efficient 
and reliable food supplier.
  As we continue to move toward a more market-oriented farm program, 
farm and ranch producers will need to derive a greater proportion of 
their income from the marketplace--and to retain a greater proportion 
of their hard-earned income through tax relief. Income averaging is 
clearly a practice that will bring some degree of fairness to the U.S. 
Tax Code.
  The current Tax Code adds up to higher taxes, more regulatory 
burdens, and added retirement worries for Nebraska farmers who labor 
year in and year out in order to feed and clothe the world. This simply 
must change. Income averaging is one tool that agricultural producers 
can utilize to enhance profits and keep rural dollars in rural 
communities. It's time that Congress properly recognizes the 
contributions of the family farmers by reducing rather than raising 
their taxes.

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