Override of farm bill veto retains tax incentives | AccountingWEB

Override of farm bill veto retains tax incentives

The Senate Thursday, in an 82-13 vote, completed its override of President Bush's veto of the $300 billion Farm Bill, legislation that has prompted widespread criticism for being bloated and benefiting rich farmers.

About two-thirds of the money slated for farmers would pay for nutrition and food stamp programs. About $40 billion is for farm subsidies and almost $30 billion would go to farmers to leave their land idle. Crop insurance to help farmers protect against losses makes up about $23 billion.

A glitch threatened the bill. A 34-page section on trade policy had been accidentally dropped from a version of the bill vetoed Wednesday. Republican leaders contended that Democrats violated the Constitution by pressing on with the veto override, but Democrats disagreed and said they would consider the trade section separately in June. It is the second Congressional veto override of the Bush presidency.

The glitch "shows that they can even screw up spending the taxpayers' money unwisely," the President's spokeswoman, Dana Perino, said on Thursday, according to The New York Times. And Bush, after his veto, said the bill "continues subsidies for the wealthy and increases farm-bill spending by more than $20 billion, while using budget gimmicks to hide much of the increase," CNN reported.

The bill boosts food stamps, but otherwise, households are feeling the squeeze from food prices. The Labor Department reported that food prices increased 0.9 percent, the largest one-month increase since January 1990, The Wall Street Journal reported.

The bill reduces a tax credit for those who blend ethanol into gasoline from 51 cents to 45 cents a gallon. Prices for corn have reached record highs due to a surge in demand for ethanol, which is made from corn.

Pilgrim's Pride Corp., the largest U.S. poultry producer, and Tyson Foods Inc., the world's biggest meatpacker, favored the reduced tax credit. They say the subsidies push up the price of corn used primarily to feed livestock, Bloomberg reported.

Accounting Today reported on tax incentives that appeared to survive the negotiations, including an agricultural equipment depreciation that would be accelerated from seven years to five. The loan limit on Aggie Loans would be increased from $250,000 to $400,000. Also, retired farmers and farmers on disability who receive payments from land conservation reserve programs can categorize the payouts as investment income in order to prevent lowering of disability or Social Security benefits.

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