Last month was tax month!
While ordinary Americans and businesses across the country have paid their fair share of taxes, the Farm Credit System (FCS) has continued to get away with paying a pitifully low tax rate for 2016.
At the end of 2016, the FCS reaped $4.85 billion in profits but paid only $175 million in federal, state and local taxes. Across the entire United States, the world’s largest economy, the FCS, holding $320 billion in total assets, paid only $175 million in taxes in 2016.
Something is very wrong with this picture.
And this is even more stark when considering what other individuals and entities pay in taxes. The average American’s effective tax rate is 29.8 percent. The effective federal corporate tax rate for agricultural companies is 25 percent and 19 percent for financial firms.
How is Farm Credit getting away with paying such a ridiculously low tax rate of 3.61 percent?
The Farm Credit Council (FCC), the FCS’s lobbying arm, works to protect the FCS’s obscenely oversized tax subsidy every year.
And now, after a series of hearings, one before the House Agriculture Committee in December 2015, another before the Senate Agriculture Committee in May 2016, another before the House Appropriations’ Committee’s Agriculture Subcommittee in February 2017 and yet another before the House Agriculture Committee in March 2017, it looks like Farm Credit has had enough. The FCC is calling in the cavalry.
The Farm Credit Council has hired an expensive tax lobbying firm in DC to lobby on “Tax issues in tax reform related to Subchapter T and related to [the] tax treatment of the Farm Credit System.”
Why would the FCC ever need to lobby Congress on tax issues?
The FCS, by their own standard, is entirely above board in their payment of taxes. By any reasonable metric, though, they haven’t paid nearly enough. And so the FCS has bid the FCC to use some of the FCS’s billions to change policy – for the good of the FCS, not for the everyday taxpayer. This is the very picture of special interest protection: the FCS has made a boatload of cash flouting the rules, and now it’s using that cash to dismantle any rules that stand in its path for more profit. What could that extra tax money be used for?
We’ve already seen how just a tiny fraction of that money could be put to good use. In Nebraska, the FCS’s tax subsidy could have been used to fund all new construction projects, pediatric cancer research (60 times over) and school lunch (276 times over). But instead of dedicating that money to a good cause, the FCC has decided that it would be better for the FCS to use that money to fund loans to telecoms. Now magnify what has happened in Nebraska to all 50 states – what could our country have done with all of that potential investment? More than we can imagine.
The money that lines the pockets of this protected special interest could be used to help the young, beginning and small farmers that desperately need support to survive. Congress needs to remain vigilant – especially while it takes the first swing at overall corporate tax reform. US taxpayers don’t need to witness a GSE get even more special treatment while they carry the freight.