Minnesota Farmers Union has deep roots in the cooperative movement. Its 1918 start in Jackson County, where men and women of Farmers Union bent their shoulders into the tasks at hand, relied on cooperation to achieve their aims. For the past hundred years, cooperatives have continued to grow and strengthen their member-owners and the communities they operate in. But today, corporate interests in agriculture, who are marching towards consolidation, are attacking cooperatives in Washington.
The Tax Cut and Jobs Act significantly altered the tax landscape. Public sentiment, non-partisan analysis and our own assessment underline the favorable outcome to corporations over the rest of the economy. Corporations received a historic tax cut that not only goes beyond anything received by individuals, small businesses and cooperatives received, but is permanent. If you are not a corporation, tax changes are temporary. In agriculture, like in other sectors, the tax deductions simply got larger. This will ensure that larger and more well-off operations derive any additional benefit from reform.
There are a couple of exceptions to additional benefits reaching the average farm. One is a deduction for qualified business income or Section 199a. The deduction counts for 20 percent of qualified business income and 20 percent of qualified cooperative dividends. Members selling to co-ops and receiving patronage would be beneficiaries of 199a.
Unfortunately, for all the tax benefits corporations captured, they are unhappy that cooperatives received any positive tax treatment. In Washington, they are working to repeal Section 199a, claiming that it was a drafting error. 199a was no error. The Congressional Record clearly explains the dual nature of the provision. A more generous cooperative provision was critical in the face of such strong corporate dominance of tax reform.
If corporations deserved a break, so do cooperatives. The value of cooperatives in our state and the broader U.S. economy is significant. There are 30,000 cooperatives that operate 73,000 places of business across the country. They contribute 2 million jobs to the economy. For the billions of revenue and wages they provide, cooperative impact goes beyond economic considerations. Cooperative’s local and regional leadership are immersed in the communities they operate. Board members and managers are our neighbors. Cooperatives are beholden to their member-owners rather than distant investors.
The Tax Cut and Jobs Act should be enough for corporations. They stand to make hundreds of millions of dollars off this reform. Cooperative tax treatment must be protected. We call on the Minnesota Congressional delegation to protect our cooperatives and 199a. We also urge them to bring us one step closer to equity by making these changes permanent. As consolidation continues, it’s essential we preserve cooperatives so that families and businesses have choices across Minnesota.
Minnesota Farmers Union president