Sec. 179 - What I Really Think

Ok, let’s talk about this IRS Section 179 thing. This is getting ridiculous.

After seemingly endless chatter and numerous stops and starts throughout 2014, it appeared on Wednesday of this week (Dec. 3rd) that Congress FINALLY was going get its act together and do something in regards to extending the popular business tax relief clause that allows for immediate write off of any business asset (new or used) purchase. The House passed legislation overwhelmingly (378-46) on Wednesday, a series of tax breaks that included bumping the IRS Sec. 179 write off limit back up to $500,000 (where it was in 2013) and making it good through Dec. 31, 2014.

So, finally, we’re good, right?

Nope. Yesterday and today the Senate had it’s say and now the best word is that they will vote on it next week. AgWeb.com’s Alison Rice has led the way reporting on the latest developments this week. Here’s a link to her latest update, filed Friday afternoon:

http://www.agweb.com/article/senate-vote-expected-on-section-179-next-week-alison-rice/

Look, I’ve got no stake in this. I’ve just been reporting on auction sale prices and used farm and construction equipment values for 25 years now. But the way this has been handled by our representatives in Washington, for a number of years now, is just plain…I come to my best description: utterly ridiculous.

Remember the “Fiscal Cliff” deal? I know, we all try to forget the nonsense back in the height of the us vs. them right/left stagnation in our capital. But on January 2, 2013 Congress passed and the President signed legislation that pushed the IRS Sec. 179 write off limit back up to an all-time high of $500,000 for immediate write off of any business asset purchased…but the kicker (unbelievable) was it also worked retroactively for 2012.

“Oh, so now that it’s 2013 you’re telling me I can write off my equipment purchases I made last year? Thanks. Thanks a lot.”

Makes no sense. None. We deserve better.

However you view this bit of national tax policy, encouraging business investment via a very significant tax write off, whether you think it’s good for our country or hurtful long term…how can ANYONE think it’s wise, good, or beneficial, in any way, to pass legislation that works retroactively, or to CONTINUALLY string policy decisions along? This whole “kicking the can down the road” mode of operation our “leaders” in Washington have fallen into has to stop. Seriously, it has to stop. We’re just making the mess worse for our kids and their kids in the years to come. They will figure it out and will thrive. We’re just making it harder and harder for them.

Pick a policy and go with it. Make a decision. Set a course. Quit thinking micro SHORT term and begin to think LONG term. When you boil it down, to me this is our culture’s chief challenge and this issue we’re talking about here, the IRS Sec. 179 clause is symptomatic ….no one looks beyond what’s right in front of their nose.

American business and the American farmer are the best operators in the world. Let’s quit making it harder on them than it has been, than it should be, than it is right now. How can you be expected to make good, sound, informed LONG-term biz decisions when you don’t know the rules? Can I write this off? How much? Maybe I can’t? When will I know?

Ugh.

The past couple days have been something. Wednesday morning I got a text from a prominent Midwestern auctioneer. He was on site early in the morning prepping for a very large farm machinery sale…”Pete, what have you heard on Sec 179?” The number of times the phrase “Sec 179” comes up in conversations I’ve had with farmers, implement dealers and and ag lenders here the past 6 weeks? Every time nearly. “Pete, what have you heard?”

The unknown is not good for any biz. In lieu of the “known”, confusion and uncertainty reign. Is this the economic climate we want to foster? For the good of our country in a hyper competitive 24/7 world we live in now? Insanity if you ask me. Time to stop it.

I don’t care whether our reps in Washington are right, left, red, blue, Republicans, Democrats, Independants, conservatives or liberals. Like a crusty old dude in my hometown of Benson, MN used to say all the time….”It don’t matter”…..just do your job. Tackle issues. Make decisions. Set a course….with LONG term vision behind it. Then let American business and American agriculture do what it does best….assess, adjust, plan, then kick butt.

Before I wash my hands and quit wasting ink writing about Washington…let me just say this. I, and I SO many other Americans out there are eagerly waiting for, clamboring, neigh STARVING for, any politician, from either side of the aisle, to come out and say….”I don’t care if you re-elect me. That’s not my focus. I’m here to do a job. I realize I won’t get my way all the time, that’s ok. Let’s tackle issues head on with a LONG term vision. Let’s work TOGETHER.”

Whoever says and does that…got my vote. And LOTS of other votes. My continual hope is that someone will figure that out…light bulb…”ah, now I see.”

Back to the topic of IRS Sec. 179 I can report to you that this business investment carrot is beyond powerful. Our auction sale price data shows, without any doubt, that prices have gone UP each of the past 11 years in the 4th Qtr. Why? You know why…..taxes, farmers looking to buy equipment to help minimize their tax bills. So in terms of the Sec. 179 clause being a very powerful job creation mechanism to foster business related sales…I don’t think any question there, it makes the money flow.

That said, you can certainly argue this “pedal to the metal” tax policy we’ve had since the initial Bush Tax Cuts of 2002 can and has had consequences, some of which, though unintended, have a wicked boomerang effect. The piper always gets paid...think about implement dealer lots and all the 1, 2, 3-year old large late model used equipment items traded in that are now just sitting there. An on-going issue.

But first things first, let’s address the issue and set a course. And then let American businesses and American farmers make their own informed decisions on how they choose to run and grow their operations.

The can has been kicked long enough. We’re tired of that road.

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