Tax News

CCH (cch.taxgroup.com) reports:

  President Bush on June 18 vetoed farm legislation for the second time in less than a month. The president cited the same objections to the farm bill the second time he vetoed it, maintaining that it lacked genuine program reforms and fiscal discipline. The House then voted 317 to 109 to override the president's veto of the legislation.

  The Food, Conservation and Energy Act of 2008 (P.L. 110-234), which the president vetoed on May 21, 2008, did not include title III trade provisions due to a clerical error. The House on May 21 and Senate on May 22 overrode the first veto but because of the procedural mistake, it was unclear if the votes were valid.

  To rectify the mix-up, the House passed HR 6124, also titled the Food, Conservation and Energy Act of 2008, this time including title III. The Senate passed HR 6124 on June 5, sending the farm legislation to the president for an anticipated veto.

  The tax title of HR 6124, the Heartland, Habitat, Harvest, and Horticultural Act of 2008, provides $1.67 billion in tax relief and incentives. Retired farmers and farmers on disability who participate in land conservation reserve programs would be permitted to count payouts under the program as investment income, preventing reductions in Social Security or disability benefits. The tax measure also includes a new deduction for endangered species recovery expenditures, a credit for agricultural chemicals security measure and an increase in the cellulosic biofuels credit, among other tax breaks.

  The measure contains several revenue offset provisions, including a reduction in the ethanol credit, a limitation on the ability to offset farm losses against nonfarm income, and creation of an optional self-employment tax for Social Security. The legislation also excludes denaturant from the alcohol fuels credit.

  By Paula Cruickshank, CCH News Staff