Graves County students visited with Sen. Paul in his office recently.
Over the past 5 years as your Senator, I have traveled to all farming areas of the Commonwealth and been honored to meet with Kentucky's agriculture industry leaders and local farmers.
More often than not, one of the first issues farmers in Western Kentucky bring up is the uncertainty surrounding tax deductions for farm equipment. Owners of other types of small businesses throughout Kentucky have also raised the same concerns.
As a former small business owner, I understand and share their concerns. Last fall, I introduced the Full Expensing Act. This legislation would expand and extend Section 179 of the tax code to permanently allow businesses to deduct 100% of their businesses expenses immediately, eliminating the complicated depreciation schedule. By doing these things, the Full Expensing Act would act to promote economic growth and capital investment by farmers and small businesses, and ultimately, bring stability to our nation's tax code.
The uncertainty surrounding this issue continues to cause serious concern for Kentucky's farmers, who often depend on this tax deduction for the purchasing of new equipment. Additionally, the current deduction limits act as an unnecessary barrier for young entrepreneurs, aspiring farmers, and those looking to expand their businesses.
According to the U.S. Department of Agriculture (USDA), Kentucky farmers have $1 billion in assets that they are currently depreciating. Under the Full Expensing Act, those assets would be deducted immediately.
The nonpartisan Tax Foundation says that over 10 years, this simple tax reform would boost the gross domestic product (GDP) by 5.13 percent, increase wages by 4.36 percent, create nearly 900,000 jobs, and raise federal revenues by $121.3 billion. When the government allows people to have 100 percent deductibility, there is vastly more money left in the economy to expand business.
My legislation would also help us ensure Kentucky has a strong future generation of farmers. Aspiring young farmers are disadvantaged by hefty start-up costs, routine equipment purchases that range from $35,000 to $400,000 per item, and limited availability to land and capital.
In a rare bit of good news out of Washington, after I introduced my bill, Congress actually passed a law increasing the deduction limits under Section 179 from $25,000 to $500,000. But our work is not done here. In addition to permanently extending that part of the tax code, my legislation would allow full expensing without a complicated depreciation schedule, which is something we still need to achieve.
I will continue working to pass my bill, and other legislation that would help our farmers and all small businesses, because we can do so much more for our Kentucky farmers than what Congress has done. In addition to the Full Expensing Act, I have introduced legislation to reform and remove unnecessary regulations on the alternative fuel market. The Fuel Choice and Deregulation Act would remove regulatory burdens that are blocking higher ethanol blends from entering the marketplace. It would also allow fuel producer and automobile manufacturers to innovate and bring new products to the market that will lower costs for consumers and increase domestic energy production. These changes would open new markets for Kentucky farmers in short order.
If we are going to ensure a strong future for American and Kentucky agriculture, we must reduce the obstacles standing in the way of investment and success. We need to work to create a more competitive and open businesses atmosphere, and I will continue to work on behalf of all Kentuckians to achieve these reforms.