If a critical federal export tax program gets the knife in Congress’ final Tax Cuts and Jobs Act, California’s $5 billion almond industry would receive one of the deepest and most painful cuts.
Roughly 104,000 California jobs generated by the almond industry are at stake in the fast-moving tax overhaul being debated in Congress, and 97,000 of those jobs are in the Central Valley where the ag-dependent economy has struggled for a decade.
As California’s leading agricultural export and third highest valued crop, almonds play a vital role in our local, state and national economies. Congressional leaders need to take immediate steps to avoid crushing California’s almond industry.
House Majority Leader Kevin McCarthy of Bakersfield and Rep. Devin Nunes, R-Visalia, who sits on the committee that wrote the bill, can come to the rescue, as can California’s other House Republicans.
No one has talked about the potential impact of the federal tax overhaul on almonds yet, because few people are aware of it. Of utmost concern to those of us in the almond industry is a little-understood program called IC DISC, which stands for “interest charge domestic international sales corporation.”
Congress created this type of corporation in 1971 to encourage U.S. exports, and shaped an opportunity for agribusiness, food and beverage companies to lower federal taxable income with dividends while helping address the trade deficit. The current House measure retains the IC DISC. But the Senate package does not.
Preserving this export tax tool is make-or-break for small family farms and the California almond industry, which exports 70 percent of its crop. The IC DISC enables the industry to be a valued solution toward addressing our nation’s trade deficit with other countries.
With growing conditions for almond trees uniquely suited to the micro-climates here, the California Central Valley provides 100 percent of the North American almond supply and 80-85 percent of the world’s supply. That translates into huge economic benefits for the Golden State, to the tune of $21 billion in gross revenue across all industries, adding $11 billion to California’s total economy.
That doesn’t even include the valuable global health benefit provided thanks to this nutritious nut.
It’s easy for representatives to talk about the huge tax overhaul in broad terms when it is moving so swiftly through Congress. But please do pause to understand where the impacts to this significant industry would be felt here in Central Valley.
If the IC DISC is eliminated, 21,000 direct almond industry jobs would be dramatically reduced, hitting the labor force hard in an already hard-hit region, and there would be gut-wrenching cuts to the 104,000 industry-related jobs, including growers, shellers and processors.
The economies in Chico, Chowchilla, Ceres, Manteca, Merced, Madera, Tracy and many more communities would be dealt a blow when joblessness rises and spending dips. The world’s almond supplies would dwindle and prices would climb.
California’s economy would suffer on multiple levels. More than a million acres of almond orchards stretch like a vital artery in the Central Valley in districts represented by Rep. Doug LaMalfa, R-Richvale, Rep. Tom McClintock, R-Elk Grove, Rep. Jeff Denham, R-Turlock, Rep. David Valadao, R-Hanford, plus McCarthy and Nunes.
Growers, shellers and processors are proud to be part of a thriving crop that is the lifeblood of the Central Valley economy. Preservation of the export tax program, IC DISC, in the Tax Cuts and Jobs Act package can keep it that way. Congressional representatives need to hear from constituents about the importance of IC DISC to our family farms and our region.
Bill Lyons is an almond grower and the General Manager of Mapes Ranch, L.P. and was California’s secretary of the Department of Food and Agriculture from 1999-2004, email@example.com.