Lawmakers Call for Immediate Section 199A Fix

February 21, 2018

The Honorable Paul D. Ryan
Speaker
U.S. House of Representatives
H-232 The Capitol
Washington, D.C. 20515

The Honorable Mitch McConnell
Majority Leader
U.S. Senate
S-230 The Capitol
Washington, D.C. 20510

Dear Speaker Ryan and Majority Leader McConnell:

Thank you for your dedication and leadership to provide tax relief for Americans and strengthen our economy. We're pleased to see many Americans benefitting from the Tax Cuts and Jobs Act (TCJA) through wage increases, bonuses, and business investments. However, like you, we've heard from many constituents in the agriculture industry with concerns regarding the unintentional inequity created by Section 199A. While not intended, this Senate sponsored provision has resulted in a dramatic competitive imbalance impacting numerous agricultural value chain stakeholders including grain handlers, feed mills, seed companies, ag retailers, biofuels producers, banks, livestock marketers, and dairy processors. Left unchecked, Section 199A's uncompetitive impacts will ripple across many other industries.

Prior to the TCJA, Section 199 of the tax code allowed certain businesses, including farmer cooperatives, a tax deduction for “qualified production activities” which was incredibly beneficial to farmer cooperatives. Unfortunately, Section 199A goes too far and has created a tax advantage for producers who sell to cooperatives instead of private and independent businesses. Thus, producers' marketing decisions are skewed by a strong economic incentive to sell to cooperatives rather than private and independent businesses. We're concerned this provision unfairly distorts the marketplace with the potential to reduce competition, directly harm small and independent businesses, and increase consolidation in the agricultural industry.

The unintended consequences caused by this Senate provision to the TCJA must be addressed immediately. The remedy should retroactively restore the competitive marketplace for agricultural producers and replicate the tax benefits accorded to cooperatives and their farmer-patrons under Section 199 prior to the enactment of Section 199A.

Sincerely,

David Young
Member of Congress

Rick Crawford
Member of Congress

Luke Messer
Member of Congress

Frank Lucas
Member of Congress

Tom Emmer
Member of Congress

Darin LaHood
Member of Congress

Section 199A Letter Cosigners:

Rep. David Young (IA-03)

Rep. Rick Crawford (AR-01)

Rep. Luke Messer (IN-06)

Rep. Frank Lucas (OK-03)

Rep. Tom Emmer (MN-06)

Rep. Darin LaHood (IL-18)

Rep. Don Bacon (NE-02)

Rep. Rod Blum (IA-01)

Rep. Sam Graves (MO-06)

Rep. Mike Bost (IL-12)

Rep. David Rouzer (NC-07)

Rep. Adam Kinzinger (IL-16)

Rep. Rodney Davis (IL-13)

Rep. Ralph Abraham (LA-05)

Rep. Kristi Noem (SD-AL)

Rep. Kevin Yoder (KS-03)

Rep. Roger Marshall (KS-01)

Rep. Pete Sessions (TX-32)

Rep. French Hill (AR-02)

Rep. Adrian Smith (NE-03)

Rep. Randy Hultgren (IL-14)

Rep. Mac Thomberry (TX-13)

Rep. Ann Wagner (MO-02)

Rep. Ron Estes (KS-04)

Rep. John Moolenaar (MI-04)

Rep. Bob Goodlatte (VA-06)

Rep. Fred Upton (MI-06)

Rep. Jackie Walorski (IN-02)

Rep. Kevin Cramer (ND-AL)

Rep. Evan Jenkins (WV-03)

Rep. Brett Guthrie (KY-02)

Rep. Phil Roe (TN-01)

Rep. Mike Gallagher (WI-08)

Rep. Brian Babin (TX-36)

Rep. Tom Garrett (VA-05)

Rep. G.T. Thompson (PA-05)

Rep. Steve King (IA-04)

Rep. Trent Kelly (MS-01)

Rep. Jim Banks (IN-03)

Rep. Trey Hollingsworth (IN-09)

Rep. David Kustoff (TN-08)

Rep. Greg Gianforte (MT-AL)

Rep. Lloyd Smucker (PA-16)

Rep. Buddy Carter (GA-01)

Rep. Glenn Grothman (WI-06)

Rep. Garret Graves (LA-06)

Rep. Jaime Herrera Beutler (WA-03)

Rep. John Ratcliffe (TX-04)

Rep. Jason Smith (MO-08)

Rep. Lynn Jenkins (KS-02)

Rep. Susan Brooks (IN-05)

Rep. Dan Newhouse (WA-04)

Rep. Jodey Arrington (TX-19)

Rep. Ken Buck (CO-04)

Rep. Kay Granger (TX-12)

Rep. Warren Davidson (OH-08)

Rep. Rick Allen (GA-12)

Rep. Bruce Westerman (AR-04)

Rep. Jeff Fortenberry (NE-01)

Rep Larry Bucshon (IN-08)

Rep. Steve Womack (AR-03)

Rep. Chuck Fleischmann (TN-03)

Rep. Todd Rokita (IN-04)

Rep. Austin Scott (GA-08)

Rep. Bob Latta (OH-05)

Rep. Tim Walberg (MI-07)

Rep. Sean Duffy (WI-07)

Rep. Claudia Tenney (NY-22)

Rep. Mike Johnson (LA-04)

Rep. Scott Tipton (CO-03)

Rep. Scott DesJarlais (TN-04)

Rep. Steven Palazzo (MS-04)

Rep. Steve Chabot (OH-01)

Rep. Blake Farenthold (TX-27)

Rep. Bob Gibbs (OH-7)

Rep. Vicky Hartzler (MO-04)

Rep. Blaine Luetkemeyer (MO-03)

Rep. John Shimkus (IL-15)

Rep. Michael McCaul (TX-10)

Rep. Jim Jordan (OH-04)

Rep. Tom Graves (GA-14)

Rep. Bill Johnson (OH-06)

Rep. Will Hurd (TX-23)

Rep. Ted Poe (TX-02)

Rep. Mike Rogers (AL-03)

Rep. Paul Gosar (AZ-04)