House Resurrects
Clinton Veto Target

WASHINGTON — With the blessing of an embarrassed White House, the U.S. House on Saturday passed a tax provision for farm cooperatives that had fallen victim to President Clinton's first-ever line-item veto.

The measure, sponsored by Rep. Kenny Hulshof, R-Mo., would settle tax disputes involving cooperatives' handling of capital-gains taxes. It passed on a voice vote.

Clinton political operatives had arranged the veto because of a belief that it would hurt a high-profile Republican campaign contributor, Texan Harold Simmons. Provisions in the bill, they thought, would allow Simmons to avoid paying capital gains taxes on his $266 million sale of a sugar processing company to an Oregon cooperative.

But the Joint Committee on Taxation, which advises Congress on taxes, said a closer look showed Simmons would not benefit at all. Clinton’s veto, in fact, had hurt only the sugar producers themselves, and potentially many others like them throughout the country.

The re-drawn proposal, to which the Clinton administration has agreed, would allow owners of processing and refining plants to defer taxes on capital gains if they sell the facilities to farming cooperatives.

It would limit deferred gains resulting from sales to farmer-owned cooperatives to $75 million. Benefits more likely would go to co-ops rather than sellers because it would broaden the pool of potential sellers, supporters say.

The new provision's cost is estimated to be $15 million over five years. The panel initially said the co-op provision would have cost $84 million over five years, including the Simmons transaction.

The measure now goes to the Senate.

Clinton, the first president to have line-item-veto power, rejected the provision Aug. 11 as part of a $152 billion tax cut bill.