[Congressional Record Volume 143, Number 117 (Monday, September 8, 1997)]
[Senate]
[Page S8932]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

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                      INCOME AVERAGING FOR FARMERS

 Mr. FAIRCLOTH. Mr. President, I heard some good words about a 
provision of the tax bill from the folks back home during August 
recess, and I want to pass on their comments.
  The subject was income averaging for farmers. The tax bill restored 
this important financial management tool. I commend Senator Shelby and 
Senator Burns for their fine leadership on this bill.
  The American farmer is the most efficient food producer in the world. 
The average farmer grows food and fiber for close to 130 people. The 
people of the United States thus enjoy the most plentiful and 
affordable food supply in the world.
  However, the American farmer faces numerous obstacles, from 
unpredictable weather to natural disasters, from outbreaks of insects 
and disease to excessive Government regulations.
  As a farmer for more than 50 years, I know that there is one constant 
in farming, and that is unpredictability.
  For many years, the American farmer was permitted to average his 
income over a 2-year period, and this brought some predictability to 
their Federal income taxes. It meant that farmers were allowed to 
moderate the tax effects of the natural boom and bust cycle that is so 
familiar to many farmers.
  The 1986 Tax Reform Act, however, abolished income averaging for 
farmers. The tax bill reduced the number of tax brackets and cut the 
top rate to 28 percent. Of course, just 7 years later, the number of 
brackets jumped and the top rate soared to 39.6 percent.
  Further, the American farmer faced another major change, the 1996 
farm bill. The new farm bill abolished the traditional price deficiency 
payments--the price supports that guaranteed a certain farm income--and 
it set the farm programs on a market-oriented path.
  The increased exposure of the farmer to the risks of the markets and 
the risks of the elements, coupled with tax rates that approach 40 
percent, underscore the need to restore income averaging.
  It is difficult for the small farmer to create a farm business plan 
that can anticipate the surges and dives in income that are part of 
farm life. It is tough to plan for tax management due to the 
uncertainties of farm operations.
  The farmer struggles to pay his bills, much less save, in a bad year, 
and he faces high tax rates in his good years. As a result, compared to 
people who earn stable incomes, farmers pay taxes at a higher 
cumulative rate.
  Mr. President, the farmer is the backbone of this Nation, and he 
keeps us fed. He is essential to our Nation and to the health of rural 
communities.
  The current Tax Code and regulatory requirements are burdens that 
plague North Carolina farmers and all American farmers and ranchers.
  The Tax Code needs to reflect their contributions to our health and 
our balance of trade. This provision will be a real help for farmers 
and farm communities across this Nation. It will save American farmers 
more than $150 million, and, more important, it will save some farms 
and the families who work them from financial ruin in the rough years 
inherent in agriculture.
  That's good for farmers and good for America.

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