Young secures "Grain Glitch" Solutions in Omnibus

Statement

A long sought fix to Section 199A of the tax code, often referred to as the "grain glitch," was included in text of the omnibus spending package introduced in the U.S. House of Representatives today.

On Monday and Tuesday, Iowa Congressman David Young organized a coalition of his colleagues to make it clear to House leadership a solution to 199A should be a priority in the omnibus. Working with at least 85 other House members, Congressman Young was able to ensure a deal to include a solution was reached.

"The Section 199A fix was desperately needed as spring planting and commodity marketing season is quickly approaching. I'm pleased we were able to come together to restore equity in our ag markets," said Congressman Young. "The Tax Cuts and Jobs Act delivered much needed tax relief for farmers, ranchers, producers, and small businesses across Iowa, and I was determined to find a solution which preserves this historic tax relief while also fixing the unintended consequence affecting our ag economy."

Many members of the coalition signed Congressman Young's letter to Speaker Paul Ryan and Majority Leader Mitch McConnell last month.

Prior to the Tax Cuts and Jobs Act, 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 went too far and 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.

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