BREAKING
New USDA Data Show
Ag Committee's Subsidy Crack Down On Millionaires
Will Touch Only 3,100 Farmers And Landowners
Both the House Agriculture Committee and House Speaker Nancy Pelosi have said that their 'reform' farm bill will "eliminate subsidies to millionaires."
But a new USDA analysis released today to the Environmental Working Group shows that the supposed crack down on subsidies to millionaires will affect almost no high-income farmers or landowners.
USDA estimates that only 3,175 wealthy farm owners and operators who receive farm subsidies would be hit by the House bill's provision to "eliminate" millionaires from the subsidy rolls. That means the provision would affect two-tenths of one percent (0.2 %) of the more than 1,601,694 individuals who received federal farm crop or conservation subsidy benefits, on average, between 2003 and 2005.
USDA estimates that another 4,025 other wealthy farmers receiving subsidies--0.25 percent of subsidy beneficiaries--fall into the Ag Committee's loophole-ridden "gimme cap" subsidy cut-off range of AGIs between $500,000 and $1 million. But USDA was unable to estimate how many of those very wealthy subsidized farms would slip out of the limits by virtue of existing loopholes and others added by the Agriculture Committee's bill to accommodate large farmers with significant earnings from cotton gins, equipment and input sales income, and investments in ethanol plants.
That means the total maximum number of wealthy people affected by the subsidy lobby's bill is 7,200--less than half of one percent of annual farm subsidy beneficiaries in recent years.
In contrast, USDA's proposal to cut off subsidies to individuals with incomes of $200,000 or more was estimated to affect 38,100 wealthy, subsidized farm operators and landlords.
CBO scored the savings for the House proposal at $550 million over 10 years. The score for the tighter Bush administration proposal was three times higher, $1.45 billion over 10 years.
Neither analysis takes account of the ability of wealthy subsidy recipients to exploit loopholes in current rules that married couples to partition their incomes in order to avoid the AGI cut-offs.
In response to a request from Environmental Working Group, the U.S. Department of Agriculture has released its analysis of the latest available (2004) IRS data on the maximum number of tax returns that would be affected by the "hard cap" of $1 million in adjusted gross income (AGI) and the loophole-ridden "gimme cap" for AGIs between $500,000 and $1 million.
Here is the USDA analysis verbatim:
HOUSE BILL
PROPOSAL:
* Decreases the Adjusted Gross Income (AGI) eligibility cap for all farm commodity payments and most conservation programs from $2.5 million to $1 million annually.
* If income is between $500,000 and $999,999, then 67 percent or more of income must be derived from farming to collect payments.
* Replaces the three-entity rule with direct attribution of payments.
* Permits double payment limits for married couples.
* Eliminates commodity certificates.
* Eliminates the limit on marketing loan benefits.
ANALYSIS:
* According to IRS data for 2004:
9,541 farm operators and landlords have AGI over $1M
3,175 of them receive farm payments
* USDA economists estimate that 12,090 farm operators and landlords likely have AGI between $500,000 and $999,9999 (based on IRS data)
4,025 farm operators and landlords would likely receive farm payments in this category (USDA calculation based on IRS data)
* Total maximum number of people potentially impacted by the House bill: 7,200
* CBO score indicates $550 million in savings over ten years under the House bill payment limit proposal (as a package)
ADMINISTRATION BILL
PROPOSAL:
* Decreases the Adjusted Gross Income (AGI) eligibility cap for all farm commodity payments from $2.5 million to $200,000 annually.
* Repeals the provision that waives the AGI cap if 75 percent of income is derived from farming.
* Replaces the three-entity rule with direct attribution of payments.
* Maintains single payment for most married couples.
* Maintains commodity certificates.
* Continues to limit marketing loan gains and loan deficiency payments.
ANALYSIS:
* According to IRS data for 2004:
o 114,300 farm operators and landlords have AGI of $200,000 or more
o 38,100 of them receive farm payments (among the wealthiest 2% of Americans)
* OMB & CBO budget scores reflect $1.45 billion in savings over ten years under the Administration's payment limit proposal (as a package)
Comments
Your post above shows that on a person basis, the millionaire farm subsidy recipients represent two-tenths of one percent of the total. On a dollar basis, what percentage of the subsidy funds do they receive?
MARC R.; Good question--but all I have is an estimate of the cost savings of the amendment, not the amount of money millionaire subsidy recipients are actually collecting now. And that estimate is the CBO's. Here's what I wrote in the post about how a family of Speaker Pelosi's means could readily qualify under her 'reform':
he Congressional Budget Office scored the savings from the House Agriculture Committee's payment limitation reform at $227 million over 5 years ($45 mil./yr) with (in my view) a very generous $194 million of it estimated to come from the AGI provision. Over ten years, the overall savings were $550 million, of which $473 million is attributed to the AGI change.
The Bush administration estimated its savings for a tightened, $200,000 AGI cap at three times those savings over 10 years--about $1.5 billion.
--COOK
Posted by: Marc R. | July 25, 2007 10:47 AM
Marc,
When asking these questions, I always think a fair question is "What percentage of total US crop production is produced by these "large" growers? The fact is that less than 15% of support payments produce more than 85% of this country's row crop production. Amazingly, this little nugget is always omitted from press releases from the EWG, Oxfam, New York Times, etc. In addition, the total waste of taxpayer money in the minds of these outfits costs you, as a taxpayer, less than 50 cents per day for a safe, stable food and fiber supply. In fact, it costs most US citizens less than $200 per year. Just remember, if you like foreign oil, you're gonna love foreign food if the aforementioned groups ever have their way.
RON: We're dumb in the big city, but we're not eating cotton yet. And it's obvious that we'd have plenty of food with lower subsidies and a fairer pattern of investment in which the big operators are, at some point, on their own. If they're so efficient, they should be, and scarce federal resources could be used for other rural needs.--COOK
Posted by: Ron Lee | July 25, 2007 3:58 PM
According to the press, House Democrats were primarily concerned about preserving the House seats of Democrats in Republican-leaning farm districts. However with the President's threatened veto, you would think they could make a more serious attempt to pass a reform bill.
Posted by: Chris Baker | July 31, 2007 4:38 PM
I would like to comment on why i think farm subsidy is abused.There is one large farm in my area that has broke down there farm into several small farms using even employees as names to collect more money.What really trobles me is they hire prison labor instead of people here in our home town to run there gin.The government should have something for people who really need help and are working to try to survive.After all its the tax payers money and the tax payer should have some say how the money is spent.Our local schools are falling down and i think some of that money could restore our schools instead of farmers abusing the program.thanks James Bamburg
Posted by: James Bamburg | August 5, 2007 5:03 PM
I ran a cotton gin in ca. for 33 seasons. the last year i worked (2005) the gins policy was to hire illegals and change there s.s. number every two years.one of these guys stated that he had 5 i.d.s and was arrested for drunk driving 2 times while working on my grew.
Posted by: gerald pettitt | September 2, 2007 1:58 PM