A New Tax Bill Under the Christmas Tree— What Next?

By Craig Regelbrugge, Senior Vice President for Advocacy and Research, AmericanHort

Happy New Year! After more than a little drama and suspense, the GOP-controlled Congress made good on its pledge to pass sweeping tax legislation, sending a final bill to President Trump for signature as Christmas approached. Don’t get your hopes up about filing taxes on a postcard. And don’t fire your expert accountant or advisor just yet, either. For most, it’s complicated and the details will matter. And some gains are only temporary.

A few things of note:

  • Cash accounting appears to be protected and expanded. While the coming rulemaking process will demand close scrutiny, the special rules that apply to nursery growers appear to remain in place. Also, businesses (small corporations and partnerships with a corporate partner) that previously had revenue thresholds on the ability to use cash accounting had the threshold increased from
    $5 million to $25 million;
  • The Estate Tax was not repealed in the final bill but exemption levels were doubled, to $22 million for a married couple;
  • The bill allows full and immediate expensing of short-lived capital investments for the first five years.

Some of the pros and cons of the final version of the tax reform bill are highlighted in“Congressional Tax Bill: Benefits and Concerns for Ag” (available at kcoe.com/congressional-tax-bill-benefits-and-concerns-for-ag), a mid-December press release issued by our tax policy partner, agricultural tax firm K-Coe Isom.

What’s next on the tax front? The new tax law is complicated, and topline summaries won’t do it justice. The bill could lead to hundreds of pages of new or revised IRS regulations. The IRS will have to work quickly as some of the changes begin almost immediately.

Funding the Government

The last official act of Congress before leaving town was to pass a short-term spending fix that funds the government until January 19. Funding the government through September will be an urgent order of business.

Labor Issues

The Department of Labor has published the new “adverse effect wage rates” setting the minimum wage for H-2A visa program users. (H-2A is the “safety net” labor program for agricultural producers with seasonal labor needs.) The new rates took effect January 4. Most areas with significant H-2A use saw more modest increases than had been feared—good news especially in Colorado, with the rate dipping from $11.00 to $10.69.

H-2B (seasonal non-agricultural) visa program users are bracing for brutal labor shortages. The program has a statutory cap of 66,000 visas, split into two 33,000-visa allotments, the first opening up October 1, the start of the government fiscal year. That cap was hit before Christmas, several weeks earlier than last year. Competition for the next 33,000 visas, for jobs beginning April 1, is going to be fierce and many landscape companies won’t get the workers they need unless cap relief is provided.

One more cautionary note—Attorney General Jeff Sessions’ Justice Department has begun aggressively investigating employers using the H visa programs, for allegedly discriminating against U.S. workers and preferring foreign workers. Word to the wise—diligence is important when it comes to domestic worker recruitment and recordkeeping.

Meanwhile, the top Congressional priority relating to immigration policy is finding a resolution for the status of the young people that received protection from deportation under President Obama’s DACA program. While few of these individuals are employed in agriculture and horticulture, many of their parents are, so the debate does matter to us. Whether there’s any bandwidth for an agricultural reform bill or H-2B relief remains to be seen.

Next Up—Farm Bill? Health Care?

2018 is the year for Congress to pass a new farm bill. House Agriculture Committee Chairman Mike Conaway seems intent on moving a bill through his committee in January, or February at the latest. The Senate is expected to move more slowly.

We’ll be paying close attention to several key farm bill programs that drive research, plant pest mitigation, and other horticulture industry priorities. These include the Specialty Crop Research Initiative, the Plant Pest, and Disease Prevention and Disaster Mitigation (Sec. 10007), and Specialty Crop Block Grant programs. Hopefully, Congress will find an opportunity for bipartisan cooperation, usually a hallmark of farm bill debates.

Health care reform is also a stated GOP priority, but with 2018 being a midterm election year, and yet with such a slim Senate majority (now 51-49 after the rather interesting Alabama special election!), real progress will be difficult on this issue. Still, with the GOP having repealed the Affordable Care Act’s individual mandate, some Republicans feel that they now “own” where health care markets—and public opinion—head next.

So it seems there’s never a dull moment in our politics these days. But one thing stays the same—our political system is competitive, whether we like it or not. Every day, decisions are made by those governing us, and nearly every decision made will result in someone gaining and someone losing. The surest way to be in the losing camp is to simply opt out, to forego your chance to have a voice.

So before the ink dries on your list of New Year’s resolutions, make one to engage in building relationships with your elected leaders and staff, and a little time to respond on those occasions when we call on you to speak out. Making these things your business is… good for business!

About the contributor: As AmericanHort’s Senior Vice President, Craig Regelbrugge is responsible for industry advocacy and research programs. The mission of AmericanHort is to unite, promote, and advance our industry through advocacy, collaboration, connectivity, education, market development, and research. Regelbrugge serves in national leadership positions representing the horticulture industry on matters relating to the labor force, plant health and production, and trade. He co-chairs the Agriculture Coalition for Immigration Reform, and is chairman of both the board of the National Immigration Forum Action Fund and the U.S. Industry Advisory Group to the North American Plant Protection Organization.