ST. PAUL — In the recently passed Tax Cuts and Jobs Act, Section 199A provides a 20 percent tax deduction to farmer-owners of cooperatives on payments received from their cooperatives.
Recently, corporate grain companies have argued that Section 199A incentivized farmers to sell their grain to cooperatives. However, these companies have received a 40 percent reduction in the corporate tax rate. This new corporate reduction is permanent, while Section 199A is set to expire in 2025.
Farmer-owned cooperatives were formed for the mutual benefit of the farmers, not as investment vehicles for owners.
“Minnesota Farmers Union has supported the formation of co-ops from our earliest days,” said MFU President Gary Wertish. “Our policy makers should ensure farmer-owned cooperatives can receive equal benefits to non-cooperative companies.”
One of the primary forces behind the formation of the cooperative system was the mutual benefit farmers would receive from the economies of scale associated with the joint marketing of their commodities. Section 199A is consistent with these principles.
Minnesota Farmers Union urges Congress to make Section 199A permanent and keep the competitive balance between corporations and cooperatives.
— Minnesota Farmers Union
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