A flurry of tax proposals in Congress

Source: Peggy Kirk Hall, Associate Professor, Agricultural & Resource Law

 

Taxes, Taxes and More Taxes.  

WOW … Just WOW!! 

Part II

 

You can count on tax law to generate interest in the agricultural community and that’s certainly the case with several tax bills recently introduced in Congress.  Within the last month, members of Congress proposed a flurry of tax proposals that could impact agriculture if enacted.  Of course, passing tax legislation is always difficult and subject to partisanship, and we expect that to be the case with these bills.

Here’s a look at the tax proposals receiving the most attention.

Death Tax Repeal Act of 2021.  Sen. Thune (R-SD) and Rep. Smith (R-MO) are the primary sponsors of S. 617 and H.R. 1712, companion bills introduced March 9 that propose to repeal the federal estate tax, which the sponsors claim to be “the most unfair tax on the books.”  The Act would also repeal the generation-skipping tax and make modifications to the computation of the federal gift tax, beginning at 18% under $10,000 and incrementally increasing by an additional 2%.  Cosponsors of the Senate proposal includes 30 other Republicans, and the House bill has 137 cosponsors including one Democrat.  The bills were referred to committee but have yet to see any further action.

For the 99.5 Percent Act.  Introduced March 25 by Senators Sanders (D-VT), Gillibrand (D-NY), VanHollen (D-MD), Reed (D-RI) and Whitehouse (D-RI) to “tax the fortunes of the top 0.5% and reduce wealth inequality,” this bill would reduce the federal estate tax exemption from its current level of $11.7 million per individual.  Under the proposal, estates in excess of $3.5 million per individual and $7 million per couple would pay the estate tax, which would begin at 45% for estates between $3.5 and $10 million.  The tax would increase incrementally, reaching 65% for estates over 1 billion.  The proposal would also reduce the lifetime gift tax exemption from its current level of $11.7 million to $1 million but would not reduce the annual $15,000 per person per year gift tax exemption for cash gifts.  It would limit the exemption for gifts to trust at $20,000 per year.  Protections for farmland include allowing farmland value to be lowered by up to $3 million for estate tax purposes and increasing the maximum exclusion for conservation easements to $2 million.  The bill would also prohibit reduced valuation for assets held in a pass-through entity, affecting the 35% valuation discount that is typical for farmland LLCs.

Sensible Tax and Equity Promotion (STEP) Act.  A group of Democrats in the Senate introduced the STEP Act on March 29 in an effort to “close the stepped-up basis loophole by taxing unrealized capital gains when heirs inherit huge fortunes on which the original owner never paid income taxes.”  The proposal would tax the transfer of property that has a net gain either during lifetime or at death.  During lifetime, a completed transfer to a non-grantor trust or individual other than spouse would be subject to tax but the first $100,000 of cumulative gain would be exempt.  At death, the first $1 million of appreciated assets would pass without taxation.  Transfers to charity, spouses, charitable trusts, qualified disability trusts would be exempt, as would gains on residences up to $250,000 per individual or $500,000 for married couples.  Taxes on illiquid property such as farms and some farm assets could be paid in installments over a 15-year period, and any taxes paid under the Act would be deductible from the federal estate tax.  The bill would also require gains on non-grantor irrevocable trusts to be reported every 21 years.

Corporate Tax Dodging Prevention Act.  Another bill by Sen. Sanders (D-VT) would go after the corporate tax rate.  The bill would restore the top corporate tax rate to 35%, its level prior to the reduction to 21% by the Tax Cuts and Jobs Act of 2017.  It also includes a number of provisions to reduce the ability of corporations to avoid paying federal taxes by moving income and profits offshore.

We are likely to see several more tax proposals in Congress in the coming year and time will tell whether any of them will have traction.  Some may merely be bargaining chips among the many legislative agendas in Washington.  One thing is certain–tax bills will continue to generate interest in the agricultural world, so we’ll keep readers updated on these and future proposals.

What’s the difference between Roundup and Roundup For Lawns?

Source: Kevin Frank, and Aaron Hathaway, Michigan State University Extension

These two different products are good examples of why understanding the difference between product names and herbicide active ingredients is critical.

The spring blitz of lawn care ads is in full swing as northerners emerge from their long winter slumber and begin to venture outside into the lawn. This year, a new product called Roundup For Lawns is gathering attention and has already generated questions from those wondering why they’d spray Roundup on their lawn—wouldn’t it kill the lawn?

The confusion originates from the name Roundup itself and that for most consumers, they don’t recognize Roundup is a product name such as Coke or Tylenol.

It turns out there is a lot in a name!

Roundup: The herbicide active ingredient in Roundup is glyphosate, which if sprayed on the lawn will kill not only the weeds but the lawn. This is a nonselective herbicide that controls any green plant on which it is applied.

Roundup For Lawns: The new Roundup For Lawns does not contain glyphosate. The herbicide active ingredients in Roundup For Lawns are MCPA, quinclorac, dicamba and sulfentrazone. These herbicides are effective on a broad range of weeds that might infest the lawn such as dandelion, crabgrass and nutsedge. When used properly it will not kill the desirable turfgrasses in the lawn. This is a selective herbicide that controls specific weeds, but not lawn grasses.

This is a good lesson in recognizing that product name is not the important information when selecting a herbicide—it’s the active ingredients that matter.

Reference to commercial products or trade names does not imply endorsement by Michigan State University Extension or bias against those not mentioned.

Fine-tuning Fertilizer

Quantifying soil spatial variability doesn’t do a farmer any good unless they are able to respond to that variability. Dr. John Fulton, Professor in the Department of Food, Agricultural and Biological Engineering at The Ohio State University, joins the FarmBits Podcast to discuss variable rate application technology and effective input management methods for responding to spatial variability.

Weather Update from NOAA/NWS/Ohio River Forecast Center

Source: Jim Noel, NOAA

The climate pattern is in a state of a flux.  The La Nina pattern is weakening rapidly and will cause changes in weather patterns in the coming weeks and will result in lower confidence forecasting for a while during this change.

For April it looks like a warmer than normal month with normal or slightly below normal rainfall. However, there will still be big swings in temperatures so the last freeze will likely be in the normal range which is generally mid-April for southern Ohio to late April for northern Ohio.  Evaporation rates will be above normal. This will all result in typical or earlier than normal planting. Beneficial rains will fall over most of the corn and soybean belts in April with the least rain likely in the eastern areas including Ohio. Over the next two weeks we expect 0.50 to 2 inches of rain with normal rainfall being 1.5 to just under 2 inches. Hence rainfall is forecast the next two weeks to be 50-100% of normal.

Soil moisture is in good shape in southern Ohio but is short in northern Ohio and needs to be watched carefully. Soil moisture will improve in most of the corn and soybean belts in April especially in the western half of the region which needs it. However, soil conditions in Ohio will likely stay the same or get a bit drier in April with above normal temperatures, above normal evapotranspiration rates and normal to below normal rainfall.

You can get all the latest information from the NOAA/NWS/Ohio River Forecast Center on drought risk here: https://www.weather.gov/ohrfc/DroughtBriefing

Seasonal information can be found here: https://www.weather.gov/ohrfc/SeasonalBriefing

The outlook during the growing season from May through summer looks like a warmer to hotter than normal summer. It is not clear whether this will be more of a consistent warm of whether it will be more of an impact to maximum temperatures above 95. We will keep you posted on that.

Rainfall confidence from May through summer is quite uncertain. With La Nina weakening that could offset some of the risk to the drier side. Hence, at this time the outlook supports normal to slightly drier than normal. In the summer 30-50% of rainfall comes from local soil moisture so it is important to watch your local soil moisture between now and Memorial Day as it will be a big driver in summer rains. Bottomline, we are aware there is some risk for growing drought risk into summer but confidence is still low in the outcome.

https://www.cpc.ncep.noaa.gov/products/predictions/long_range/poe_index.php?lead=4&var=p

In summary, the tendency supports warmer weather overall through the planting and growing season with rainfall normal to below normal. There is some risk of expanding drought but confidence in that remains low at this time.

Does This Product Work?

Source:  Emerson Nafziger, Department of Crop Sciences, University of Illinois

“Every agronomic decision is a good one for someone” is a quote that I saw recently that reminds us that being “entrepreneurial” is high valued in today’s business world, rewarded in some cases by large amounts of venture capital invested in startup companies. That’s as true in crop agriculture as in any other business, and it means that startups are under pressure to find or create niches and product(s) to fill them, and to demonstrate that these products are widely sellable. The “grand prize” can be sale of the startup to a larger company, yielding a large return for investors and a chance for the entrepreneur to get a large financial award and perhaps move on to bigger projects.

The result is an increasing number of novel crop inputs, accompanied by creative marketing campaigns. Such campaigns often employ the trappings of science to help build trust in such inputs and those who develop them. Photos of serious-looking people examining flasks or test tubes while dressed in white lab coats populate websites, especially for startups that are developing and selling novel inputs such as microbes, or the less specific terms “biologicals” or “biostimulants.” Companies tend to point to field trials they have in their database, and a selected set of such results may be available to potential customers. Testimonials are very common, and almost every such website includes mention of the positive ROI (return on investment) that buyers can expect from use of this product.

Unsurprisingly, company websites tend to highlight data selected for the purpose of supporting sales—it would make little sense from a marketing standpoint to show all of the data. A few decades ago, it was common for companies to engage university researchers to conduct trials on novel products, and for companies to use such results (at least the favorable ones) to help support sales. There may have been cases in which results from universities were insufficiently positive to support sales, and a product wasn’t taken to market as a result. But for the most part, university testing was used to demonstrate that the company had enough confidence in the product that it supported public research on it even without knowing what such research might show.

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Calibration for Rate Controlled Sprayers

Source: Erdal Ozkan, OSU Extension

I had an article in last week’s CORN newsletter encouraging growers to fine tune and calibrate their sprayers. I had mentioned that the next couple of weeks may be the last best time period to do this since planting season is just about to start. There would not be any better time to do this than now. The next day I got an email from a grower asking me this question that I get often: “I have a rate controller in the cab that regulates the flow rate of the sprayer regardless of the changes in sprayer ground speed. So, should I still calibrate the sprayer to find out the application rate?”. The answer is, Yes, you should. Although the rate controllers do an excellent job with regulating the flow rate of nozzles to keep the application rate constant, a manual calibration at least once a year is needed to ensure the rate controller is functioning properly.

Here is why we should confirm the accuracy of rate controllers: Unfortunately, electronic controllers usually cannot detect flow rate changes on each nozzle on the boom, and none can detect changes in spray pattern. If a nozzle is plugged, or extremely worn out, the rate controller cannot tell us this is happening. It will still try to maintain the constant application rate by changing the system pressure and force other nozzles to spray less or more to overcome the problem in one or several nozzles. If the ground speed sensor works based on revolutions of the tractor wheels, the ground speed determined may not be accurate, because of the slippage that may occur under some ground conditions. Even the tire pressure being off just a few psi may change the tire revolutions per minute leading to erroneous travel speed readings. Finally, Controllers don’t show changes in spray patterns that may happen when a nozzle is defective, plugged, or worn-out. So, we will have to continue manually checking the flow rate of the nozzles, and visually observing the changes in spray patterns until the technology is developed to do these observations remotely, and on-the-go.

As I mentioned in the article in last week’s CORN newsletter, it usually doesn’t take more than 30 minutes to calibrate a sprayer, and only three things are needed: a watch or smart phone to record the time when measuring the nozzle flow rate or the travel speed, a measuring tape, and a jar graduated in ounces. Please take a look at the Ohio State University Extension publication FABE-520 for an easy method to calibrate a boom-type sprayer.  Here is the URL for this publication: http:// ohioline.osu.edu/factsheet/fabe-520  

Not knowing limitations of rate controllers may create serious problems. I already mentioned how smoothly the rate controllers keep the application rate the same regardless of changes in travel speed. However, this convenience comes at a cost if the controller is forced to make drastic changes in the application rate as a result of too high or too low of a travel speed. As you know, to achieve best results from pesticides, the application rate, as well as the droplet size must remain relatively unchanged during the entire spraying. When sprayer speed goes up, to maintain the pre-set application rate, the controller requires the system pressure to go up to increase the nozzle flow rate. This, unfortunately results in more drift-prone droplets coming out of the nozzle, especially if the nozzle used is designed for low application rates within the recommended pressure ranges. Conversely, when the sprayer slows down, the opposite happens: the controller forces the system to lower the pressure, in order to reduce flow rate of nozzles. This will result in production of larger than the desired size of droplets, leading to inadequate coverage. If you are spraying Dicamba or 2,4-D herbicides, you need to pay even more attention to operation of rate controllers. As you know, only a small number of nozzles at specific ranges of pressure can be used to spray these products. Significant changes in ground speed may force the rate controller to make significant changes in spray pressure that may be outside the allowable legal pressure range required to spray these herbicides. Without you realizing it, you may find yourself in violation of the label. Make sure the nozzle size selected will allow the controllers to make necessary changes in the flow rates while still staying within a safe, applicable and allowable pressure range.

Taxes, Taxes and More Taxes. WOW … Just WOW!!

Source: Ohio Farm Bureau

Taxes are becoming more of a hot topic in Washington D.C. and some of the plans being proposed would have a disastrous impact on rural Ohio and rural America as a whole. Proposed legislation in Congress would tax capital gains at death and eliminate stepped-up basis as a way to raise revenue for government spending, causing Farm Bureau to issue an Action Alert to our members. Ty Higgins has more with OFBF’s public policy vice president, Jack Irvin.

Click here for more information

 

Should you expect any freeze damage to winter wheat? Most likely, no.

Source: Laura Lindsey, Alexander Lindsey, OSU Extension

The incoming cold temperatures are not likely to impact winter wheat. The magnitude of freeze damage depends on: 1) temperature, 2) duration of temperature, and 3) wheat growth stage.

 

Prior to the Feekes 6 growth stage, the growing point of wheat is below the soil surface, protected from freezing temperatures. Most of the wheat in Ohio is at the Feekes 4 (beginning of erect growth) or Feekes 5 (leaf sheaths strongly erect) growth stage and should be unaffected by the incoming cold temperatures, predicted to be mid- to low 20s on Wednesday and Thursday.

At Feekes 6 growth stage, our research has shown only a 5% reduction in wheat yield at a temperature of 20°F for 15-minute duration and 50% reduction in wheat yield at a temperature of 12°F for 15-minute duration. (Although, it should be noted, there is a great deal of variability in response due to environmental conditions for the remainder of the growing season. Additionally, greater soil moisture levels can help buffer against short-term temperature fluctuations.)

For more information on Freeze Symptoms and Associated Yield Loss in Soft Red Winter Wheat, please see our new FactSheet: https://ohioline.osu.edu/factsheet/anr-93

Now is the Time to Fine Tune Your Sprayer

Source: Erdal Ozkan, OSU Extension

Pesticides need to be applied accurately and uniformly. Too little pesticide results in poor pest control and reduced yields, while too much injures the crop, wastes chemicals and money, and increases the risk of polluting the environment. Achieving satisfactory results from pesticides depends heavily on five major factors:

  1. Positive identification of the pest.
  2. Choosing the least persistent and lowest toxicity pesticide that will work.
  3. Selecting the right equipment, particularly the right type and size of nozzle for the job.
  4. Applying pesticides accurately at the right time.
  5. Calibrating and maintaining equipment to make sure the amount recommended on the chemical label is applied.

Inspection of sprayers

Higher pesticide costs and new chemicals designed to be used in lower doses make accurate application more important than ever. There is no better time than early spring to take a closer look at your sprayer. Here are some of the things I would recommend you do this week if you don’t want to unexpectantly halt your spraying later in the season when you cannot afford delaying spraying and missing that most critical time to control weeds:

  • First, if you need new or one other type of nozzles on the boom this year, do not delay purchasing new nozzles. Do it now.
  • Double-check your sprayer for mechanical problems before you start using it.  You won’t have time to do this when planting is in full swing.
  • Clean the sprayer tank thoroughly and make sure all filters on the sprayer, especially the nozzle filters are clean.
  • Clean spray nozzles to make sure they are not partially plugged. Check their flow rates, and replace the ones that are spraying more than 10 percent of the original output at a given spray pressure.
  • Check the agitator in the tank to make sure it’s working properly. This is extremely important if you will be applying dry chemicals. Run water through the spray system to make sure everything is working properly.
  • Always carry a spare, excellent quality pressure gage (glycerin filled) in your shop, and check the accuracy of the pressure gage on the sprayer compared to the reading you see on this spare pressure gage. Your rate controller will not know if your pressure gage is bad, and the flow rate of nozzles will be adjusted by the rate controller using the bad pressure gage.
  • Once you are convinced that all sprayer parts are functioning properly, it is time to calibrate the sprayer.

Calibrate the sprayer

One can determine if the chemicals are applied at the proper rate (gallons per acre) only by carefully calibrating the sprayer. Calibration, perhaps more than anything else, will have a direct impact on achieving effective pest control and the cost of crop production. While applying too little pesticide may result in ineffective pest control, too much pesticide wastes money, may damage the crop and increases the potential risk of contaminating ground water and environment. Results of “Sprayer Calibration Clinics” I participated in Ohio a while back, and data from several other States show that only one out of three to four applicators are applying chemicals at a rate that is within 5 % (plus or minus) of their intended rate (an accuracy level recommended by USDA and EPA). For example, if your intended rate is 20 gallons per acre, the 5% tolerable difference will be 1 gallon (5% of 20). So, your actual application rate should be as close to 20 gpa as possible, but not outside the range of 19 to 21 gpa.

How do you calibrate the sprayer?

There are several ways to calibrate a sprayer. Regardless of which method you choose, you will end up measuring the nozzle flow rate (in ounces), and the actual travel speed in miles per hour to determine the actual chemical applied in gallons per acre. Once you determine the actual application rate, you should find out if the difference between the actual rate and the intended rate is greater than 5% of the intended rate (plus or minus). If the error is greater than the 5% tolerable error margin, you will need to reduce the error below 5% by doing one of three things: 1) Change the spraying pressure, 2) change the travel speed, and 3) change nozzles (get a different size) if the error cannot be reduced below 5% by making adjustments in either the pressure or the travel speed, or both.

It usually doesn’t take more than 30 minutes to calibrate a sprayer, and only three things are needed: a watch or smart phone to record the time when measuring the nozzle flow rate or the travel speed, a measuring tape, and a jar graduated in ounces. Please take a look at the Ohio State University Extension publication FABE-520 for an easy method for calibrating a field crop (with boom) sprayer.  Here is the URL for this publication: http://ohioline.osu.edu/factsheet/fabe-520 

USDA Announces Pandemic Assistance to Farmers

Source: Chris Zoller, Extension Educator, ANR, Tuscarawas County

The United States Department of Agriculture (USDA) announced this week it is establishing new programs and efforts to provide financial assistance to farmers negatively impacted by the Coronavirus pandemic.

The new program is called the USDA Pandemic Assistance for Producers and is intended to reach a broader representation of producers than previous COVID-19 aid programs.  The program will place a greater emphasis on small and socially disadvantaged producers, specialty crop and organic producers, timber harvesting, as well as support for the food supply chain and producers of renewable fuels.

The USDA Pandemic Assistance for Producers program administered by the Farm Service Agency (FSA) includes four parts.  Details below were provided in a news release from USDA.

Part 1:

USDA will dedicate at least $6 billion to develop a number of new programs or modify existing proposals using discretionary funding from the Consolidated Appropriations Act and other coronavirus funding that went unspent by the previous administration. Where rulemaking is required, it will commence this spring. These efforts will include assistance for:

  • Dairy farmers through the Dairy Donation Program or other means:
  • Euthanized livestock and poultry;
  • Biofuels;
  • Specialty crops, beginning farmers, local, urban and organic farms;
  • Costs for organic certification or to continue or add conservation activities
  • Other possible expansion and corrections to CFAP that were not part of today’s announcement such as to support dairy or other livestock producers;
  • Timber harvesting and hauling;
  • Personal Protective Equipment (PPE) and other protective measures for food and farm workers and specialty crop and seafood producers, processors and distributors;
  • Improving the resilience of the food supply chain, including assistance to meat and poultry operations to facilitate interstate shipment;
  • Developing infrastructure to support donation and distribution of perishable commodities, including food donation and distribution through farm-to-school, restaurants or other community organizations; and
  • Reducing food waste.

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