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Proposed Corporate Tax Plan

The plan proposed for the corporate tax changes is hugely negative for agriculture.  Most economists believe that the plan will increase the value of the dollar by 20-25%. Here are some links.

http://fortune.com/2017/01/17/trump-gop-corporate-taxes-imports/

https://www.nytimes.com/2017/01/07/upshot/the-major-potential-impact...

 

The first link gives an example of the new plan with a car produced abroad or in the US and built for $30k and sold for $50K.  Today the profit would be taxed at the 35% tax rate.  In the proposed plan, the car built abroad would be taxed at the new 20% tax rate on the entire $50k.  The car built and sold in the US would only be taxed on the profit at the lower tax rate.  Huge advantage to be built in the US.  But there is another carrot for exporters.  A car built in US and sold abroad would pay no tax on the profit and also get to deduct the $30K cost of the car as an expense that would offset other profit.  This huge advantage to export would result in, and be somewhat tempered by, the 25% increase in the value of the dollar.

 

The 25% increase in the dollar would certainly be bad for the farmer, but great for the grain exporter.  How will this work?  Could farmers join a nation wide COOP for farm exports that would be able to pass the tax savings back to the farmer?

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Honored Advisor

Re: Proposed Corporate Tax Plan

Probably would never happen, but I would think that grain raised in another country would face the same issue coming into the US..... 

Like the grain from Brazil to the SE US this winter when cheap grain was available in the western corn belt...

But unfortunately ag exports are too small a piece of the pie.

 

 

Not sure I am following the logic of a value increase of the dollar hurting farmers and not exporters?  They face the same issues, don't they?

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