General Summary of the Bill

The proposed legislation, titled the "Grown in America Act of 2024," seeks to amend the Internal Revenue Code by introducing a new tax credit aimed at encouraging the purchase of American agricultural commodities. This tax credit, referred to as the "Domestically Produced Agriculture Credit," is designed to offer financial incentives to taxpayers who invest in agricultural inputs produced within the United States. The credit is calculated based on the domestic agricultural input costs and is capped at $100 million per taxable year. The bill also outlines specific eligibility criteria, the method for determining credit amounts, and provisions for cooperative organizations to share credits with their members.

Summary of Significant Issues

A key issue present in the bill is the cap of $100 million on the agriculture credit, which might limit incentives for larger agricultural enterprises or cooperatives that may otherwise benefit from such investments. Additionally, new businesses or those in the initial growth phase could face challenges due to the requirement of a 3-year average for determining credit eligibility, potentially putting them at a disadvantage. There are also concerns that the intricate and complex language used in defining terms such as "applicable percentage" and "domestic agricultural input costs" may make it difficult for potential beneficiaries to determine their eligibility and understand the process.

The bill's emphasis on domestic agricultural commodities has raised apprehensions about protectionism, which might result in trade tensions with other countries who export these commodities to the United States. Moreover, the aggregation rule and other special provisions might present additional complexity, particularly for small businesses or cooperatives without legal expertise. Lastly, the future issuance of regulations and guidance from the Secretary of Agriculture suggests uncertainty, as these future changes could affect the long-term strategic planning of businesses wishing to utilize the tax credit.

Impact on the Public

The bill stands to impact the public by encouraging the purchase of domestically produced agricultural goods, potentially strengthening the agricultural sector within the United States. This could yield economic benefits such as increased employment opportunities and growth in local farming industries. However, if the bill is perceived as protectionist, it might negatively affect international trade relations, potentially leading to higher costs for consumers if foreign agricultural commodities become more expensive due to strained trade relationships.

Impact on Specific Stakeholders

Positive Impacts:

• Domestic Farmers and Producers: The bill benefits American farmers by incentivizing buyers to choose local products, potentially boosting the market for their goods and enhancing their profits.

• Cooperative Organizations: These organizations might find a new avenue for financial distribution through the apportionment of credits amongst their patrons, which could strengthen cooperative efforts and stability.

Negative Impacts:

• Large Agricultural Enterprises: The $100 million cap may limit these enterprises' ability to capitalize on available credits fully, potentially restraining their growth and operational expansion.

• New and Growing Businesses: The 3-year eligibility requirement might inhibit newer businesses from accessing the credit, potentially slowing their entry into competitive markets.

• International Trade Partners: Countries that export agricultural goods to the U.S. might view this bill unfavorably, interpreting it as a move toward protectionism, which could affect trade relationships and agreements.

In conclusion, while the "Grown in America Act of 2024" promises benefits for domestic agricultural sectors, it also presents challenges that must be addressed to prevent negative ramifications on both local and international levels. Adjustments in execution and clarity in regulations could enhance its reach and effectiveness.

The "Grown in America Act of 2024" (H.R. 10494) is a piece of proposed legislation aimed at amending the Internal Revenue Code to establish a tax credit that incentivizes the purchase of American agricultural commodities. The central financial component of this bill revolves around the introduction of the domestically produced agriculture credit, which permits businesses to deduct a part of their costs for purchasing U.S.-produced agricultural commodities. Here's a closer examination of how financial elements are treated within the bill and how they tie into identified issues:

Financial Allocations and Limits

The bill specifies that the agriculture credit for any taxable year is capped at an amount equal to the lesser of 25% of a taxpayer's total agricultural input costs, multiplied by an applicable percentage or $100,000,000. This financial cap aims to control the maximum benefit a taxpayer might receive under the credit system. The intention here is to encourage the purchase of American agricultural products by providing a financial incentive.

However, setting a cap at $100,000,000 could limit incentives for larger agricultural enterprises or cooperatives. By imposing this cap, the legislation aims to prevent excessive tax benefits from flowing disproportionately to larger entities; nonetheless, it may inadvertently restrict the full utilization of potential funds for larger scale agricultural enterprises that could use this credit for expansion or to enhance efficiencies, thereby potentially undermining the bill's overall economic impact.

Eligibility and Complexity

Eligibility for this credit requires that businesses demonstrate a 3-year average applicable percentage of domestic agricultural inputs. This means that the domestic agricultural input costs must make up a certain percentage of a taxpayer’s total input costs to qualify for the full credit. While this condition seeks to ensure that only those businesses genuinely committed to sourcing domestically benefit, it can pose challenges, particularly for newer businesses or those in a growth phase lacking the required historical data. Such constraints could impact fairness and reduce competitiveness in the sector.

Additionally, the bill's language around the credit and its limitations is complex. It includes precise formulas and various thresholds that businesses must meet, which could pose clarity challenges. Small businesses and cooperatives, in particular, may find navigating these provisions without legal or financial expertise burdensome, potentially reducing their ability to utilize the credit effectively.

Regulatory Guidance and Transparency

The Secretary of Agriculture is tasked with maintaining a list of domestically unavailable agricultural commodities, which is crucial for determining which purchases won't count against a taxpayer’s domestic input statistics. The reliance on future regulations and guidance leaves space for interpretation, potentially affecting how businesses plan long-term strategies. Lack of transparency surrounding how this list is determined could raise issues of perceived bias or unwelcome administrative influence.

In conclusion, while the financial incentives within the "Grown in America Act of 2024" are designed to bolster domestic agricultural production, several elements related to monetary references may introduce complexity or limit the effectiveness of the bill. Key among these are the fixed cap on the available credit, challenges in establishing long-term eligibility, and potential for regulatory uncertainty. These factors require careful consideration to ensure the bill achieves its goals without disadvantaging certain business segments or causing unintended economic impacts.