Lawmakers Try Again To Create
Ag-Related "Savings Accounts"

WASHINGTON —(AP)— With agriculture facing another year of declining exports and depressed prices, lawmakers have proposed new IRA-type savings accounts to encourage farmers to save money in boom years to weather the busts.

It's the second try for Rep. Kenny Hulshof, R-Mo., who last year saw the idea scrapped at the last minute. This year, the measure has enthusiastic support from both parties and from more than three dozen farm groups.

Texas Farm Bureau President Bob Stallman said last week that legislation to help producers save for tough times by deferring taxes on part of their incomes is one of the best ways for government to make the market less volatile.

``Too much rain, too little rain, disease problems and low prices are threatening family farms that have been in business for generations,'' said Stallman, a rice producer from Columbus, Texas.

``The really bad news is that some of the resulting farm sales and foreclosures could have been prevented if farmers and ranchers had FARRM accounts,'' he said at a Capitol news conference.

Sponsored by Hulshof, Democratic Rep. Karen Thurman of Florida and more than 80 other lawmakers, the Farm and Ranch Risk Management act would allow individual producers but not corporate operations to make tax-free contributions to the accounts of up to 20 percent of their annual taxable income.

The money could be held in the accounts for up to five years without penalty and would be taxable on withdrawal. Money held more than five years would be subject to a 10-percent penalty.

``This is something that's doable,'' Hulshof said Wednesday. He and Thurman are members of the tax-writing Ways and Means Committee. Hulshof said its estimated cost is $500 million over five years, $900 million over 10.

``This could be included in any tax bill that's considered this year,'' Hulshof said.

GOP leaders still are deciding which tax cuts to push, although most agree that a 10-percent cut in income-tax rates won't happen and are looking at various alternative packages of more targeted, less costly reductions.

Among them is eliminating the ``marriage penalty'' paid by many couples compared to their taxes as singles, phasing out estate taxes, raising personal exemptions in the income tax and lifting Social Security earnings limits for seniors who want to work.

Hulshof said that in his northeast Missouri district, those ideas ``really do connect with voters, where it's more difficult to fire up the crowd about an across-the-board measure.''

Many analysts agree, pointing to tamed inflation, low unemployment and tax refunds from the Internal Revenue Service running well ahead of last year's levels.

Supporters of the farm savings accounts say that against the backdrop of the market-oriented 1996 farm law, the savings accounts give farmers a tool to manage fluctuations in income from year to year.

``They don't want the federal government telling them when they've had a bad year,'' Thurman said. ``This gives them another option to manage the risks they face daily.''

U.S. Department of Agriculture figures released last month lowered U.S. farm export projections by $1.5 billion to $49 billion, lower than last year's $53.6 billion. It was a blow to U.S. farmers, who have become increasingly reliant on exports since government subsidies began phasing out as part of the 1996 farm law.