[Congressional Record (Bound Edition), Volume 146 (2000), Part 17]
[Senate]
[Page 24259]
[From the U.S. Government Publishing Office, www.gpo.gov]



               CONSERVATION RESERVE PROGRAM TAX FAIRNESS

  Mr. BROWNBACK. Mr. President, I rise today to urge my colleagues to 
retain the important ag tax provisions contained in the Senate version 
of the upcoming tax package that will soon be before us. I have not 
seen the final tax bill as of yet, but word is that most if not all of 
the agricultural tax provisions are being stripped from the bill at the 
will of the House. I hope this is not true. I cannot imagine why we 
would choose to leave out farmers from important tax relief at a time 
when this Congress has clearly recognized the economic hardships in 
farm country today.
  I plead with my colleagues to include these necessary provisions in 
any final tax package.
  Specifically, I am talking about a provision that came from a bill 
Senator Daschle and I introduced--along with 31 co-sponsors--to clarify 
that Conservation Reserve Program (CRP) payments made to farmers for 
taking agricultural land out of production for environmental 
improvement--are not subject to self employment social security taxes--
a rate of up to 15 percent of the payment amount.
  The CRP has been a great success for this nation. The program 
provides financial incentives for improving and preserving 
environmentally sensitive land--taking it out of production and 
enhancing its environmental benefit. The CRP program increases water 
quality, wildlife habitat and prevents soil erosion--all factors which 
have become even more important in light of recent concerns about 
nonpoint source pollution in our nation's waterways.
  The Senate has strongly supported this measure--passing it by 
unanimous consent earlier this year on the death tax debate--and our 
Senate leadership has held firm in fighting for this needed provision, 
but for some reason, our fine colleagues in the House have decided to 
make an issue of this provision and are trying to strike it from the 
tax package.
  It makes no sense to yield to the House on this matter. The 
provision, as currently contained in the Senate tax package--will only 
cost $292 million over 5 years--but that money and the clarity it 
brings to our nation's farmers is worth far more than can be said in 
this time of farm economic stress. This provision allows farmers to 
plan and better use their resources next year because they will no 
longer have to wonder or worry about whether the IRS is going to come 
after them for a conservation tax they didn't know they owed.
  Currently, there is confusion over whether CRP income should be taxed 
owing to a recent court case in the 6th Circuit Court of Appeals which 
overturned a 1998 Tax Court ruling that CRP income is not subject to 
social security taxes. The Tax Court found and I concur, that because 
it is a rental payment the government makes in exchange for farmers 
taking environmentally sensitive land out of production, CRP payments 
should be treated the same as other contractual agreements made by 
farmers for land use--and be exempt from self-employment taxes.
  The new court ruling creates a discrepancy between active farmers who 
take part in CRP--which are now subject to the tax--and landowners who 
do not farm but take part in CRP and are exempt from the tax.
  This tax correction is just common sense. Now more than ever we 
should appreciate the need for conservation and the co-benefits of 
wildlife, air and water quality it provides. We should not allow a tax 
to create confusion and a disincentive for farmers to trust and work 
with government for the good of the environment.
  Numerous ag groups support this bill including the National Corn 
Growers, National Wheat Growers, American Soybean and Cattlemen's Beef 
Associations--along with the National Farmer's Union and the American 
Farm Bureau. This is our only opportunity to address this important 
issue.
  In my state of Kansas alone, $102.7 million in CRP payments were 
issued in 1999. Are we really going to tell farmers that this money--
promised them for conservation purposes--will now be additionally 
taxed? This would amount to a disincentive for farmers to participate 
in environmental and conservation programs. Is that the message this 
Congress really wants to send?
  Again, I urge my colleagues to include this important provision--and 
all the ag tax provisions that have been so carefully worked out and 
included in the Community Renewal and New Markets Act. We cannot afford 
to leave this important work undone.

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