In mid-December, legislation was passed allowing farmers and small businesses to immediately write off up to $500,000 in capital assets purchases instead of depreciating it over time. The measure, known as Section 179, included the purchases of farm equipment, which caused a bit of a holiday shopping rush at implement dealers across the country.
“The passage of Section 179 was a major part of our sales the last two weeks of last year,” said Cody Kirkpatrick, JD Equipment’s Washington Court House store manager. “We had decent sales throughout the year, but with commodity prices dropping, farmers weren’t sure what to do with their bottom line. We sat on some machines all year long that we could have sold if we would’ve just had a guarantee about Section 179.”
Kirkpatrick says that the rush to buy equipment at the end of the year has waned in years past, noting that farmers are becoming much better at tax planning throughout the year and not waiting until Dec. 31 to make a decision. This year was a bit different.
“With Section 179 not in place for most of 2014, the majority of my customers sat back because they weren’t sure what would happen before year’s end and had to figure out where they were on taxes and listen to what their accountants had to say,” Kirkpatrick said.
JD Equipment’s phones rang off the hook once the tax legislation went through and conversations about Section 179, which expired with the New Year, are still going on as farmers wonder what will happen in 2015.
“Congress needs to realize what an impact Section 179 has,” Kirkpatrick said. “Not just on the farmer or the ag economy, but on everybody. From the manufacturers that make our equipment, to JD hiring more people because of strong sales, which in turn feeds more mouths and strengthens our community.”
Farmers were also lining up at Evolution Ag to make major purchases as news of Section 179 spread. The company’s Delaware location principle and GM, Doug Loudenslager, said the temporary, last-minute nature of the legislation still had some farmers balking at making those important business decisions.
“We, and all small businesses, have been asking Congress for a more permanent tax code for some time,” Loudenslager said. “It’s difficult for any farmer or small business owner to make good business decisions based on a one-year-in, one-year-out formula to a tax program.”
Loudenslager said that farmers and the ag industry don’t mind paying their fair share of taxes. But, as an industry, he feels as though ag businesses are paying more than what is really necessary compared to what others have to pay.
“I think it has been proven that investments in business are good, positive economic aspects,” Loudenslager said. “We need to be encouraging investments in all areas, not just agriculture.”
For other companies, like White’s Ford in Urbana, sales of the popular F-150 to farmers were down a little. General Sales Manager Ben Charles said the impact of Section 179 was not what he expected.
“It was just too little too late,” Charles said. “The real impact would be if something like Section 179 was done permanently because I think the way Washington went about it this year really scared the heck out of a lot of people, and that uncertainty doesn’t help anyone.”
As for what may happen later this year, with a new Republican-led Congress and new members on the House and Senate Tax Committees, many promises are being made for a complete tax overhaul. How they may affect agriculture is something only time will tell.