This week House Ways & Means Committee Chair Dave Camp (R, MI) unveiled a sweeping 1,000-page draft federal tax reform bill, a proposal said to be the most ambitious rewrite of the federal tax code for individuals and business since 1986.

The bill takes on both individual and corporate tax rates, effectively scrapping seven personal tax rates for two at 10% and 25%, and cutting the corporate tax rate to a globally competitive 25%.  Congress' Joint Committee on Taxation scores the package as saving $700 billion over 10 years, and says the package would not add to the deficit, but would deliver to the average family of four savings of about $1,300. In his press release, Camp claims the "simpler, fairer tax code" will help create 1.8 million private sector jobs and will boost the Gross Domestic Product (GDP) by $3.4 trillion, 20% of today's economy.    

Camp, who surrenders the tax-writing committee chair at the end of December, has been pushing federal tax reform since he became the Ways & Means Committee chair.  He's had support from Sen. Max Baucus (D, MT), former chair of the Senate Finance Committee, but with Baucus' resignation from the Senate this month to become ambassador to China, Camp decided it was time to begin the process with or without Democrat or broad Republican support.

The bill has no chance of seeing action this year, said leaders of both chambers this week. In an election year, particularly in a Congress marked by such bitter partisan rivalry, such a major effort would find it impossible to generate a consensus. At the same time, debate and compromise over the details of broad federal tax reform will take months, particularly since there is no Senate counterpart to the Camp plan on the horizon. House Speaker John Boehner (R, OH) did allude to action in the 114th Congress beginning January 1, 2015.

Camp received praise for being bold enough to the put the draft bill into the public arena, with nearly unanimous agreement the federal tax code is broken and badly needs fixing.  However, both industry and lawmakers shied away from endorsing the plan.

Agriculture and agribusiness are the targets of specific federal tax action under the Tax Reform Act of 2014 draft legislation, which was made public this week by lame duck House Ways & Means Committee Chair Dave Camp (R, MI).

The universal effects of the Camp plan would first cut personal tax rates - currently ranging from 10% to nearly 40% -- to just two rates, 10% and 25%, with a 10% surtax tacked on to certain wage earners making over $450,000 a year.  The standard deduction would be increased to $11,000 for individuals and $22,000 for married couples. The alternative minimum tax (AMT) would be repealed across the board, as would deductions for state and local income taxes. Camp's plan would cap the mortgage interest deduction at $500,000, but make permanent the child credit, raising it to $1,500.  

The corporate rate would be cut to 25%.  Under the capital gains rewrite, the first 40% of the gain would be excluded from tax, with the remainder treated as regular wages. The highest rate would be reduced by 6%. The research & development tax credit would be made permanent.

Farmers would continue to use cash accounting regardless of size, and be allowed to continue expensing deductions under Sec. 179, which covers deductions for equipment and infrastructure. The plan, however, does not allow continuation of various biofuels tax credits, an issue expected to be dealt with by Congress separately.

The plan proposes repealing the business deduction for fertilizer and other farm materials after 2014, increasing tax revenues by $3.4 billion by 2023. It would also repeal the special five-year carryback provisions for deduction of farming losses, aligning ag with other business sectors. In the world of conservation, Camp would make permanent rules allowing contributions of livestock/crop production land to conservation easements to be deducted up to 100% of the owner's adjusted gross income, but would repeal special deductions for soil and water conservation, farmland erosion prevention and endangered species protection starting in the 2015 tax year, which the lawmaker says will increase tax revenues $800 million by 2023.

Camp would make permanent current tax law allowing farmers and rural small business owners to expense depreciable assets of up to $25,000 for property valued at up to $200,000. This change would cut federal income by about $55 million, and Camp says this is a major benefit to the targeted taxpayers. The plan would repeal current IRS provisions allowing producers to average the previous three years income in computing tax liability after the 2014 tax year.

According to the Waterways Council, the draft includes a six cent increase in the 20-cent-a-gallon user fee paid into the waterways trust fund, a move supported by inland waterways barge operators, but not included in the Water Resources Reauthorization Act conference committee discussion.

Hearings to confirm President Obama's nominees to become Commodity Futures Trading Commission (CFTC) members will be held March 6, according to Sen. Debbie Stabenow (D, MI), chair of the committee.  

Nominations up for consideration are: Timothy Massad to be CFTC chair, and Sharon Y. Bowen, New York, and J. Christopher Giancarlo, New Jersey, to be new commissioners.  Massad is currently the Department of Treasury assistant secretary for financial stability.

U.S. biofuel production will continue to increase through 2023 but at a slower rate, continuing to consume on average 35% of the corn crop, says a USDA report released this week.  The growth rates for ethanol and biodiesel are each predicted to drop to below 3% each year, which for ethanol translates to about half the historical growth rate.

The Renewable Fuels Assn. (RFA) says the USDA projection of "slower but steady growth" in ethanol is "consistent with the projected demand for grain-based ethanol required by the Renewable Fuels Standard (RFS)," according to a report this week in AgriPulse.  However, USDA may not be accounting for an expected increase in ethanol export demand, RFA said.

Following his executive order last week to expedite federal drought assistance to California and other states, President Obama, Secretary of Agriculture Tom Vilsack and Interior Secretary Sally Jewell met this week with a group of western state governors - in town for the National Governors Assn. meeting - to talk about drought, forest fires and other issues unique to their states.  

In a related development, the Senate approved and has sent to the President a bipartisan bill authorizing up to $68 million over five years in federal spending on drought forecasting. The money goes to the National Oceanic & Atmospheric Administration (NOAA) to pay for a national drought forecasting system, and sends $13.5 million to the National Integrated Drought Information System.

The President reiterated to the governors his commitment of assistance to drought affected areas as well as aid for other natural disasters. He also unveiled a new plan that will be part of his FY2015 budget proposal to pay for "extreme" forest fire control by financing federal efforts through an accounting system similar to that used in the Federal Emergency Management Agency (FEMA). 

USDA and the Department of Interior would control a special account that would pay the costs of federal wildfire fighting.  Normal funding for such efforts would have to be expended, allowing both departments to draw on the special account to cover their costs rather than redirecting other program money to firefighting.

Attending the White House meeting were the governors of Arizona, Colorado, Nevada, Oklahoma, Oregon, Utah, Washington and Wyoming.

The Trans-Pacific Partnership (TPP), a multi-nation negotiation to loosen trade barriers in the Pacific Rim market, has been stalled - mainly due Japan's lack of agreement in recent negotiations, which wrapped up this week. And, there is no timeline for further talks.

Japan, despite assurances to the contrary given when it was accepted as a member of the negotiating nations, continues to oppose new increased market access for rice, beef, dairy products, sugar and wheat, as well as long-standing opposition to increased auto imports. The U.S. is insisting on greater market access in all of those areas; however, the U.S. has raised similar objections to sugar import increases, and Canada is balking at greater access for dairy and poultry imports.

U.S. Trade Representative Michael Froman continues to voice optimism on the talks' outcome. Froman met twice last weekend and early this week with his Japanese counterpart to talk market access, but did not reach "a meeting of the minds". Trade experts agree if the U.S. and Japan reach an agreement, a final deal is much easier to achieve.  This week Froman received from a bipartisan group of Senators a letter seeking his assurance the U.S. will not sign off on a deal until Japan agrees to eliminate tariffs and non-tariff limits on agricultural imports.  

Market access issues are not the only roadblocks to the TTP treaty. While Froman had hoped to conclude the agreement at the end of 2013, increasing pressure for and against the pact over labor protections, environmental rules and other assurances make unclear whether the multi-nation treaty will see approval in 2014.  Additional pressure for a deal will be exerted when President Obama makes a trip to Asia in April, which includes stops in Japan and Malaysia.