Assessing Legislation’s Impact on Your Family Farm Business

First Financial Bank
Mar 8, 2022
New legislation is being introduced in Congress or state legislatures. How do you get beyond the political sound bites and screaming headlines to understand what that legislation will truly mean for your family’s farm business? Where can you find the unvarnished truth?

The nightly news is full of reports about various bills under consideration by Congress, especially those that affect the tax code and agriculture. In state houses around the country, legislators introduce potential laws regularly that may affect you. As with all bills, there are a lot of conversations, negotiations and amendments before – and if – any of these bills comes up for a vote.

How should you feel about a proposed bill?

Before deciding if you should support or oppose it, you want to know how that bill will really affect your family and your business. Unfortunately, it can be almost impossible to get a clear answer from a 15-second sound bite, especially if there’s a lot of political or emotional noise around the bill. Where can you get accurate information to assess the bill’s value to you?

Begin at the source: who introduced the bill and what is their stated intent

Who created a bill and why? Finding the answer to that question can help define the “intent” or reason why a law is proposed. If the law was introduced by a person or entity and you align with their agenda, it can help you begin to assess the potential value.

Having clear definitions matter

When legislation is drafted, it is important that it clearly addresses who are affected. As a farmer, you are probably all too aware that “family farm” is used often by politicians but rarely clearly defined. The USDA’s Economic Research Service has a glossary of terms, including defining “family farm” but within that designation, there are a variety of sub-categories based on size, revenue, production, etc. that can affect how you are treated for tax and legislative purposes. When a legislator refers to a family farm, you need to understand which one(s) are really included – or not – in that proposed legislation.

And as a bill goes through the process of being scored, negotiated and amended, who is included can change – so be sure to keep that in mind when the legislative horse trading is happening. Regardless, you will still want some additional insights, especially those that are based on data, not emotion.

Research and data can help

There are a variety of resources available who use data to research the potential impact of proposed and existing legislation. They attempt to take the emotion out and give you data- supported answers to your questions. Here are some examples/potential resources for you:

Start with the specific legislative body’s “score” or analysis of the bill’s fiscal impact. Congress requires a CBO score of a bill – basically, what will it cost if the bill passes and what kind of offsets would be needed to make it “neutral”. In your state, there is most likely an equivalent step/requirement for any prospective state law. The details they provide can give you insight into how the current bill might affect you.

One of the overarching and wide-reaching resources, The National Agricultural Law Center is a well-established free resource to find research on laws that affect the production and consumption of food. This is a great place to find the details and impact of farm bills. Whether federal or state laws, this is a great “one-stop” site for data and insights to help you better evaluate what a law can mean to you.

There are also other nonprofit organizations who focus on legislative research. They come in a variety of “independent” and nonpartisan flavors. Just because they are not affiliated with any particular political party doesn’t mean they don’t have a particular alignment or approach. When looking at these organizations’ work, it is good to look at each source’s assumptions – and look at more than one. Organizations such as the Tax Foundation, the National Conference of State Legislatures and many state bar associations (for example, Illinois’) provide insight and assessments of what is in process with state lawmakers.

Your trade association is always important to leverage for additional insights and information on pending or recently enacted legislation. Organizations such as Farm Bureau and other trade associations have a particular viewpoint and stated goals. If their focus and goals are truly representative of you and your business, their insights can be invaluable. But be aware, large national organizations may represent a wide constituency, so confirm that the reasons they are supporting or opposing certain legislation coincides with your interests.

Don’t forget to check the facts

Sites like Factcheck.org attempt to be neutral and fact check statements made by both the left and the right about legislation (and many other topics of interest). It doesn’t hurt to confirm statements made by your political representatives on a piece of legislation that is potentially important to you.

Conclusions

It is always difficult to determine exactly what will happen until a bill gets close to being an actual law – and even then, it can change in the nth moments before the vote. So it is always good to read what both parties say – then check with some resources who use the data to play “what if” to evaluate the potential impact on you. And of course, always work with your trusted financial advisors to understand exactly how tax changes will pertain to your particular situation.

Having a good grasp on your financials can help you in many ways. Check out this article. Want to chat about your business plans? Let’s talk.

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