Farm bill would allow continued subsidies for millionaires

The House and Senate farm bills would allow millionaire landowners to continue to cash big government subsidy checks despite language in the proposals intended to cut off crop subsidies for the wealthy, according to a new analysis of tax data by GOP Senate aides.

Finance Committee ranking member Charles Grassley (R-Iowa) yesterday released the analysis, which is based on data from the Internal Revenue Service and Congressional Budget Office. It estimates that under the proposed new farm bills, hundreds of millions of dollars in crop subsidies would continue to go out to landowners whose overall adjusted gross income for the year exceeds $1 million.

“The House and Senate farm bills left loopholes that a 9630 John Deere tractor could drive through. It was reform in name only. Now I hope we can move to legislation that includes real reform,” Grassley said.

Grassley is a member of the conference committee charged with hammering out an agreement on the House and Senate farm bills. The Senate’s version of the farm bill, approved in December, would stop payments to non-farmers who make more than $750,000 a year but has no income caps for farmers. The House bill would cut off farm payments for millionaire farmers or non-farmers who make more than $500,000.

The Bush administration is pushing for a much lower cap of $200,000 in adjusted gross income. White House officials have threatened to veto the bill if it does not include more reform.

Other members of the conference committee said yesterday that income limits will be a major topic of negotiation for the farm bill, but the panel is unlikely to go as far as Grassley or the administration has suggested.

“The White House is insisting on it so the prospects of additional reform are probably pretty good in the conference,” said Sen. Kent Conrad (D-N.D.). “But it is not going to be what the administration is calling for.”

Conrad said the $200,000 income cap is “not in synch” with the high costs of farming, as fertilizer and other prices have almost doubled.

Agriculture Chairman Tom Harkin (D-Iowa) said the income limits are the “big sticking point right now” that members “have to work out.”

Harkin said the proposal from Grassley and Sen. Byron Dorgan (D-N.D.) — which would have placed a hard cap on how much any farmer can receive in federal subsidies rather than basing the limits on income — has already had its chance in the Senate and is unlikely to be included in the conference. The Grassley-Dorgan amendment failed in a 56-43 vote during the farm bill debate. It needed 60 votes for passage.

In 2006, the Agriculture Department paid more than $230 million to landlords and farm operators who exceeded the House income cap and $137 million to those exceeding the Senate cut-off. The Congressional Budget Office has estimated that 83 percent of those funds would continue to go out under the House bill, and 95 percent would continue to be paid under the Senate bill.

Grassley said the continued payouts would be possible because landowners could switch the way they collect rent from the people farming their land, so their tenants could continue to receive the commodity payments. High-income farmers could also buy more land to bring their adjusted gross income level down or divide the payments among other family members.

Grassley based the analysis on data he requested from IRS on how many recipients of farm payments have an income above the cap and whether or not they were landlords.

A coalition of environmental, religious, sustainable farming and taxpayer groups have advocated for lowering the income level or including the payment cap in the new farm bill. They say the current payments unfairly favor large industrialized agriculture. The Sustainable Agriculture Coalition suggested applying the lower income cap to the land, rather than the landlord or producer.

“No one on the farm bill conference committee should suffer under any illusions that taking action on an AGI limit is, by itself, doing anything very significant for payment reform,” Sustainable Agriculture Coalition director Ferd Hoefner said yesterday of the analysis.

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