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Tax measure complicates farm bill debate

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Tax measure complicates farm bill debate
Hastings Minnesota 745 Spiral Boulevard 55033

REDWOOD FALLS, Minn. - A tax proposal having little to do with agriculture is dividing Minnesota lawmakers involved in writing new federal farm legislation.

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The issue - paying for part of the farm bill by tightening tax regulations on some foreign companies with U.S. business - elicited sharply different views from Agriculture Secretary Mike Johanns and four key legislators during a Tuesday forum at Farmfest.

Rep. Collin Peterson, who as House Agriculture Committee chairman authored the House farm bill, and other Democrats strongly defended the tax proposal even as Johanns called it an historic anomaly and Minnesota's Republican senator predicted it would not survive.

"You can have a great farm bill without raising taxes," Johanns told a crowd gathered at the southwestern Minnesota agriculture trade show.

Peterson and fellow Democratic Rep. Tim Walz, of southern Minnesota's 1st District, said the Bush administration backed the concept five years ago and has changed its position.

Federal farm legislation historically does not include tax hikes, Johanns said, adding the House bill would "kick sand on the shoes of another industry."

That prompted what may have been Peterson's most animated defense of his bill since it was passed last month.

Foreign companies should not be evading U.S. taxes they owe, exclaimed Peterson, the usually tempered veteran lawmaker. The 7th District congressman said he did not control the last-minute inclusion of the tax measure in his bill, but supported it because it protected agriculture programs.

"Had I not got this offset, this money would have come out of your farm programs and you wouldn't have a safety net," Peterson told the large audience of farmers.

While they sparred over the tax measure and crop payment limits, Johanns and the lawmakers agreed the new farm bill should include major elements of existing law, which is popular with farmers and many interest groups across the country.

While it is known as the farm bill, the five-year legislation funds a variety of U.S. Agriculture Department programs, including conservation, food stamps and rural economic development initiatives. More than two-thirds of the bill's spending is targeted for nutrition programs.

That is the area Peterson and Democrats said an estimated $7.5 billion gained by closing the so-called corporate tax loophole would be spent, but Johanns said there is no targeted revenue.

The tax debate may become a moot point when farm bill negotiations resume next month.

Sen. Norm Coleman, a Republican on the Senate Agriculture Committee, said that panel will not include the controversial tax measure in its proposal.

"The bottom line is we're going to get rid of that," he said.

Democratic Sen. Amy Klobuchar, another Senate Agriculture Committee member, said after the forum that is it too soon to know how the bill will be paid for.

With the existing legislation expiring Sept. 30, senators will write their farm bill proposal after Labor Day. While he opposed the tax provision, Coleman said his "template in the Senate is going to be what Collin Peterson passed in the House."

Both Klobuchar and Coleman said the bill should maintain the safety net of payments and loans for farmers, include strong sugar beet and milk programs and provide more money for renewable energy projects.

The House and Senate bills must be reconciled before a final version is sent to President Bush. Peterson said he is open to other ways of paying for part of the roughly $286 billion legislation, but no one has presented a viable alternative.

"We have a long ways to go," he said.

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