Our Take

Rhetoric on Adjusted Gross Income Grossly Distorts the Facts

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June 26, 2013
Programs: Agriculture

Many farm bill apologists attacked basic means testing as a “poison pill” for the farm bill.

House Agriculture Committee leaders Frank Lucas (R-OK) and Collin Peterson (D-MN) joined the crop insurance lobby wrongly claiming that the Kind-Petri amendment (similar to a stand-alone bill – H.R. 1995 - introduced a few months ago) would “destroy Federal Crop Insurance… [and] zero out the safety net,… [meaning] no insurance for farmers, period.” They went further, alleging that means testing would “throw many farmers out of crop insurance and raise premiums on the rest.”

The amendment’s means testing provision states that agribusinesses can continue to receive generous crop insurance premium subsidies as long as their adjusted gross income (AGI) is less than $250,000 per year. No agribusiness will be denied crop insurance, just subsidies. Furthermore, “adjusted” means “after deductions and expenses.” And the laundry list of expenses that can be deducted from one’s income touches nearly every imaginable cost that an agribusiness might incur, including but not limited to:

  • Interest on loans
  • Health insurance, liability, crop, and building insurance premiums
  • Property taxes
  • Farm buildings and grain storage bins
  • Fuel
  • Equipment
  • Labor
  • Repairs and maintenance
  • Seed
  • Transportation
  • Waste clean-up
  • Pesticides and chemicals
  • Irrigation

AGI does not include:

  • Value of farmland,
  • Buildings, or
  • Other real estate which has increased in recent years with high crop prices and record farm profits.

AGI is profit.

All too often subsidy proponents spew false statements with no consequences. But last week, the Kind-Petri crop insurance reform amendment actually received more support (208-217) than final passage of the entire farm bill. This should be a wake-up call for committee leaders to go back to the drawing board and produce a bill that is more cost-effective, transparent, responsive, and accountable to taxpayers. Committee leaders can start by making common sense reforms to crop insurance instead of throwing more money at an inefficient and ineffective program.

Filed under: Avoid Unnecessary Liabilities, Cut Subsidies

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