AFBF: 3 % Withholding Tax Needs Repeal WASHINGTON, D.C., 5/27/2011 – A new 3 % withholding tax on government payments for goods & services has the potential to erode funds for conservation purposes, have negative impacts on rural health care availability & create serious cash-flow challenges for farmers & ranchers, according to a statement by the American Farm Bureau Federation. In a statement submitted this week to the House Small Business Subcommittee on Contracting & Workforce regarding 3 %t Withholding Tax, AFBF said it would oppose the new withholding tax, slated to begin in 2013. The organization is supporting legislation (H.R. 674) introduced by Reps. Wally Herger (R-Calif.) & Earl Blumenauer (D-Ore.), to repeal the withholding requirement. “This has the potential to create cash-flow problems for farmers & ranchers because inputs like seeds & fertilizer are often purchased months before a commodity is sold & income is received,” AFBF stated. “Reducing farm revenue by 3 % of government safety net payments will make it harder for farmers to purchase the supplies they need to plant & grow a crop, to pay farm workers & to maintain farm buildings & equipment.” The withholding tax also has the potential to reduce the effectiveness of Agriculture Dept programs that are designed to protect & improve the environment. For example, if a farmer or rancher were to receive an $11,000 payment for protecting streams or rivers under the CRP, $330 would be withheld & be unavailable for the conservation effort. In addition to CRP, the withholding requirement would also influence the Conservation Stewardship Program & the Environmental Quality Incentives Program. AFBF also is concerned that the withholding tax will impact the availability & affordability of health care in rural America. “Only about 10 % of physicians practice in rural America & there are far fewer specialists, despite the fact that nearly 1/4 of the population lives in rural areas,” AFBF said. “Because of the aging of rural Americans, Medicare serves 23 % of the rural population, compared to 20 % of the population in urban areas, according to the National Rural Health Ass’n. Consequently, withholding 3 % of Medicare payments will make it harder to maintain rural health facilities & more difficult to attract doctors to rural areas.”