How the 2008 Farm Bill Brings Tax changes

According to many pundits, the so-called “Farm Bill”, passed by Congress last year, is inaptly named; the 2008 “Food Bill” would be a more appropriate moniker, they say.

And rightly so. Of the $307 billion cost of the bill (over five years), $209 billion goes toward nutrition programs, such as food stamps, food banks and emergency food distributors, while $35 billion is marked for crop subsidies. “That’s why we talk about this being a food bill,” said Senator Tom Harkin, the chairman of the agriculture committee that backed the bill.

Although the subsidy aspect of the bill is substantially less than those directed at feeding the poor, many are critical of the fact that subsidies were not curtailed somewhat. Mainstay crop prices (those for wheat, soybean, and corn) have gone up 126%, 57% and 45%, respectively. Bush vetoed the bill, calling it wasteful and bloated, but his veto was overridden, decisively.

Another criticism of the bill is that the adjusted gross income cap for farm subsidies is $750,000 (Bush supporters called for a limit of $200,000) at a time when farm prices have never been better.

However, not everyone is complaining. The bill is aiding fruit and vegetable farmers for the first time, and also is providing a subsidy for ethanol produced from prairie grass, which will aid those states that don’t grow corn. The price of gasoline was at an all time high had a definite impact on support for this aspect of the legislation.

Historically, farm bills among those that are the most closely watched by the American public. Those on both sides of the subsidy debate have strong feelings on the subject. Those who feel reform is in order wonder if it will ever come, since it didn’t happen during a year when farm income was healthy and stable.

Other criticisms for the bill are directed toward insertions made by both Democrats and Republicans. Senator Mitch McConnell (R) inserted a provision for a substantial tax break for race horse owners (Senator McConnell, is, not surprisingly, from Kentucky), while Sen. Pelosi (D) from California requested $170 for the Pacific Salmon Industry.

Only time will tell how all of this will play out over the next five years. The bill was passed when gas prices were exorbitant, and, more importantly, it made it through the legislative process before the banking industry fiasco and its effect on the economy was made fully public.

Now that Americans are more aware of the impact of the economic downturn, that generous $750,000 subsidy cap might not set too well with the majority of the voting public.