A Democratic plan to pay for an increase in spending in the farm bill with a $4 billion tax provision targeting foreign corporations prompted a GOP revolt Wednesday, with Republicans warning that all 21 GOP members of the House Agriculture Committee were prepared to vote to kill the whole measure because of it.
Rep. Bob Goodlatte (R-Va.), the ranking member on the committee, warned the House Rules Committee of the GOP opposition Wednesday after he met with all of the Republican members of his panel.
“We’ve been betrayed,” Goodlatte said. The farm package had passed unanimously out of the House Agriculture Committee.
The dispute threatened to make for a messy floor food fight Thursday on the farm bill, which already faced criticism that it failed to do much to reform expensive subsidies.
The Republican backlash against the tax provision authored by Rep. Lloyd Doggett (D-Texas) came amid a new White House veto threat, with critics charging that the provision would violate numerous tax treaties with other countries, potentially hurt foreign investment in the United States and invite retaliation from other countries.
Agriculture Secretary Mike Johanns called the bill “a major missed opportunity” and blasted the tax provision. “I find it unacceptable to raise taxes to pay for a farm bill that contains virtually no reform,” Johanns said.
Democrats vigorously defended the plan, which would help pay for an increase in spending on nutrition programs for the poor.
Doggett said foreign companies have been able to hide income in “tax-haven hideaways.”
“Ensuring foreign-owned companies pay their fair share is not just about tax fairness, it is also about creating a level competitive field for American companies that play by the rules,” Doggett said. “This legislation would have no effect on legitimate multinational corporations that are not employing a haven to dodge American taxes.”
Doggett ripped the veto threat.
“Who is surprised that the administration takes the side of CEOs who hold beach-side board meetings at the expense of nutrition programs to feed the least fortunate here at home?” he asked.
Rep. Earl Pomeroy (D-N.D.) also attacked President Bush. “It is astonishing that the president would oppose additional revenue into programs that feed the hungriest in our country in order to protect tax dodgers based in foreign countries,” Pomeroy said in a statement.
In addition to the tax fight, the farm bill faces bipartisan efforts led by Reps. Ron Kind (D-Wis.) and Jeff Flake (R-Ariz.) to phase out direct payments to farmers and prohibit payments to the wealthiest farm owners, with support from the White House, which wants to save money; environmental groups, who want more money to go to conservation efforts; and liberals, who want more money to directly fight hunger.
Kind said he hoped the tax fight would prompt more Members to endorse his amendment, which is strongly opposed by big commodity interests.
“There is a very real chance the farm bill will go down on the House floor,” Kind said, noting Goodlatte’s comments and adding that his amendment would save billions, negating the need for an offsetting revenue hike.
“This is what we’ve been saying from day one,” Kind said. “Let’s find the reforms in the farm bill and avoid an offset fight.”
Johanns praised the Kind-Flake amendment, which calls for a prohibition on government subsidies to farmers who make more than $250,000 a year, down from the current $2.5 million and the $1 million in the House bill. Johanns prefers to go even further, prohibiting payments to farmers who make more than $200,000 a year.
“There is a point at which people graduate from receiving government cash subsidies,” he said.