Bill resurrects dairy tax-deferred savings account idea
Growing yogurt industries in New York and Idaho may help take the lid off an idea buried in a 2-year-old report from a special USDA dairy advisory committee – tax-deferred savings accounts for dairy producers.
U.S. Sens. Charles Schumer (D-N.Y.) and Mike Crapo (R-Idaho) introduced the Dairy Augmentation for Increased Retail in Yogurt (DAIRY) Act, designed to help dairy producers establish federal savings accounts to help manage revenue risk and market fluctuations. Idaho and New York are the third- and fourth-largest dairy-producing states, respectively, and expanding Greek yogurt maker Chobani and other companies have contributed to surging interest in yogurt production in both states.
The idea for tax-deferred savings accounts for dairy producers received unanimous support in a March 2011 report) from the Dairy Industry Advisory Committee (DIAC).
Created during a dismal economic period for dairy producers, USDA established DIAC in late 2009 to review issues related to farm milk price volatility and dairy producer profitability. In their report to USDA in March 2011, all 17 panel members approved amending federal law to allow dairy farm operators to establish special tax-deferred savings accounts.
The tax-deferred farm savings accounts were seen as one of several tools to assist in the private management of volatility in prices and farm returns, designed to transfer taxable income from highly profitable years to years of low or negative taxable returns. Like many of the 22 other recommendations in that report, however, tax-deferred savings accounts fell victim to on continuous debate over supply/growth management that has stymied changes.
Under the DIAC recommendation, producers would have had to keep funds in an account for a minimum of six months. There would have been no limits on the amount of money placed in the account, and payment of income taxes on contributions and interest would occur in the tax year in which the funds were withdrawn.
The Schumer/Crapo plan follows recommendations included in the DIAC report. It has been referred to the Senate Committee on Finance.
To see the full DIAC report, including additional information on tax-deferred savings accounts for dairy producers, click here.
For more information on the Dairy Augmentation for Increased Retail in Yogurt (DAIRY) Act, click here.