House Agriculture Committee Chairman Collin Peterson says farmers like the idea of closing a “ loophole” that allows U.S. earnings of foreign-owned corporations to be taxed at a lower rate to help pay for the new farm bill.

And Bush administration officials who think growers are concerned about whether ending special tax treatment for those corporations may violate U.S. treaty obligations should get a reality check, the Minnesota Democrat says.

Speaking to reporters during his weekly telephone briefing Thursday (Aug. 2), Peterson chuckled when asked about Agriculture Secretary Mike Johanns’ comments that the Bush administration and farmers “won’t stand for higher taxes” to pay for increased farm program spending in the farm bill.

“He needs to get out and talk to farmers a little more,” said Peterson, referring to Johanns’ remarks at a press briefing on Aug. 1. “I haven’t found a single farmer who has a problem with the loophole closing we put in the bill. In fact, once they understand what it is, they say, ‘Why haven’t we been doing this in the first place?’”

The exchange was the latest in what’s becoming a war of words between House and Senate Agriculture Committee leaders and Bush administration officials over who’s more in tune with the needs of U.S. farmers.

Last winter, Johanns became the first secretary of agriculture in decades to make specific recommendations for the farm bill, based on a series of listening sessions conducted by USDA throughout the latter half of 2005. Although most farm organizations have said they would be happy with few changes in the 2002 farm bill, Johanns has cited repeatedly the farm bill forums that USDA held as an example of why the legislation requires an overhaul.

“I think I’m as connected to farmers as any secretary in maybe a long time, maybe in history,” he told reporters on Aug. 1. “We did the listening sessions. I’m constantly out there visiting with farmers. My experience is that farmers are a conservative lot, and they would not stand for taxes on another industry to finance their programs.”

Johanns’ comments came a day after Iowa Senator Tom Harkin, chairman of the Senate Committee on Agriculture, Nutrition and Forestry, criticized the administration for threatening to veto the farm bill because of what it calls a “tax increase” on the foreign corporation’s earnings.

“I think it’s hard for the administration to argue that it’s tax and spend, when we’re just closing a loophole,” said Harkin. “I would compliment the House for taking that action, and I hope to do the same here.”

On the House vote to transfer payments for off-shore oil drilling operations to help pay for the farm bill, Harkin noted the Senate almost passed a bill last spring to “go after those royalties,” falling three votes short of invoking cloture for the measure.

“Some didn’t like where the money was going,” he said. “But if it went to agriculture for biomass production and conservation programs, perhaps the Senate would be more inclined to vote for the measure.”

Asked about reports that Montana Sen. Max Baucus, chairman of the Senate Finance Committee, and Budget Committee Chairman Kent Conrad were looking at the House funding actions less favorably, Peterson bristled at the suggestion.

“The House has a bill that’s paid for and has passed,” he noted. “If they don’t like the way we’re doing that, we’ll talk about it in conference. I’ll say the same thing I’ve said to the Republicans: ‘if you don’t like what we’re doing, offer an alternative.’”

Peterson said he finds the Bush administration’s willingness to defend trade agreements that appear to be more beneficial to foreign entities than to U.S. business interests hard to fathom.

“I happen to think this shouldn’t have been done in the first place, that we shouldn’t have U.S. government employees negotiating treaties with foreign corporations allowing them to pay less taxes than people in the United States,” he said. “I have a real problem that we’re doing that in the first place, and I have no problem ending it.”

He said he and Sen. Harkin were scheduled to meet and discuss the farm bill the House passed July 27. “From his remarks yesterday, it seems he’s seeing some things he likes and I’m hopeful the Senate Agriculture Committee will have a process to get them fairly close to where we are.

That would mean the conference won’t be so difficult.” Harkin said he expects to have a farm bill draft prepared in time for the Senate ag committee to begin discussing when Congress returns from the August recess.

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e-mail: dbennett@farmpress.com