The "Grown in America Act of 2025," as proposed in H.R. 1707, introduces a tax credit aimed at encouraging businesses to buy American agricultural products. The bill seeks to amend the Internal Revenue Code of 1986 by establishing the "Domestically Produced Agriculture Credit." This credit allows companies to claim a tax benefit based on the percentage of their agricultural inputs sourced from U.S. producers, with a maximum cap of $100 million annually. However, to qualify, businesses must meet escalating thresholds of domestic sourcing over several years, starting at 50% and eventually reaching 85%. The bill also addresses special rules for cooperative organizations, permitting them to apportion credits among their members.

Significant Issues

Several issues emerge from the bill's complex structure. Firstly, the escalation of domestic sourcing requirements from 50% to 85% over a span of years could disadvantage smaller agricultural entities unable to meet these thresholds, creating an imbalance with larger producers that might more easily comply. Secondly, the $100 million cap on the credit favors larger agricultural corporations, potentially sidelining smaller farms. Additionally, rules permitting the aggregation of businesses could disadvantage small businesses, as they may be combined with larger entities, making it harder for them to qualify for the credit.

The requirement for the Secretary of Agriculture to designate a list of commodities that cannot be feasibly produced domestically lacks clear criteria, potentially leading to confusion and inconsistent application. The complexity of the credit's structure, particularly the apportionment rules for cooperative organizations, could further discourage participation due to possible administrative errors and compliance difficulties.

Impact on the Public

Broadly, the bill aims to bolster domestic agriculture by incentivizing the use of U.S.-produced commodities, which could enhance national agricultural self-sufficiency and provide a boost to the domestic farming sector. For consumers, the focus on U.S.-grown products may support local economies and possibly improve food security.

However, the complexity of the bill, particularly in terms of compliance and meeting the required thresholds, may pose challenges. Consumers could face varying impacts on food prices due to shifts in sourcing practices by agricultural businesses. Moreover, the legislation's detailed rules and increased administrative burdens might deter some companies from participation, limiting its effectiveness.

Impact on Stakeholders

Small Agricultural Entities: Small farms and businesses might find themselves at a disadvantage due to the escalating threshold requirements and credit cap favoring larger entities. If these small stakeholders are unable to meet compliance requirements or escalate domestic sourcing as required, they might miss out on the credit benefits, thus potentially widening market competition disparities.

Large Agricultural Corporations: These stakeholders are likely to benefit the most from the legislation. They typically have more resources to adjust sourcing practices to meet the changing thresholds, potentially seizing a larger share of the available tax credits.

Cooperative Organizations: While cooperatives have the opportunity to apportion credits among members, the intricacy of executing such apportionment might prove challenging, particularly for smaller cooperatives, thus offering an advantage to larger and more resourceful ones.

Government and Regulatory Bodies: The administrative load on the Secretary of Agriculture to define domestically unavailable commodities might result in increased bureaucratic complexity and resource allocation to establish and maintain the needed lists.

Overall, while the Grown in America Act of 2025 presents a structured initiative to support domestic agriculture, its intricate rules and thresholds demand careful consideration to balance benefits across varied agricultural stakeholders. This balancing act is crucial to ensuring the policy's success and widespread adoption.

The "Grown in America Act of 2025" addresses financial incentives through a tax credit aimed at encouraging the purchase of domestically produced agricultural commodities. This commentary will explore the financial elements within the bill, particularly the proposed tax credit calculations and its potential implications.

Financial Allocations and Credit Calculations

The bill introduces a tax credit, specifically designed to support and incentivize the domestic agricultural sector. The most notable financial element is the domestically produced agriculture credit, which is determined annually. This credit is capped at the lesser of two figures: the amount based on a calculation involving the taxpayer's expenses or $100,000,000. This amount establishes a significant potential credit limit, potentially benefiting substantial agricultural businesses with high operational costs.

Issues Relating to Credit Limits and Distribution

The $100,000,000 credit cap could disproportionately benefit larger agricultural corporations, as these entities often have the resources to maximize their credit under the set calculation method. In contrast, smaller farms may not be able to reach the threshold necessary to take full advantage of the credit, thus raising concerns about fairness and market balance.

Another key aspect is the escalation of applicable threshold percentages from 50% to 85% over several years, which impacts eligibility for the credit. Smaller producers, who may struggle with such rapid increases in domestic sourcing requirements, might find it difficult to meet these criteria, potentially harming their competitiveness.

Aggregation and Cooperative Organizations

The bill's aggregation rule stipulates that all entities treated as a single employer under specific tax code sections will be regarded as a single taxpayer for the purpose of the credit. This could inadvertently disadvantage smaller businesses that, when grouped with larger entities, might see their ability to qualify for the credit diminished.

Regarding cooperative organizations, the bill introduces a complex set of rules for credit apportionment among members. While this aims to allocate financial benefits equitably within cooperatives, the administrative complexity could favor larger organizations over smaller cooperatives due to their greater capacity to manage such intricacies.

Eligibility Complexity and Administrative Considerations

The necessity for the Secretary of Agriculture to define and list commodities that cannot be feasibly produced in the U.S. adds an additional layer that may need clearer criteria. This ambiguity could lead to confusion among taxpayers attempting to determine their qualification for the credit.

Moreover, the calculation of the "3-year average applicable percentage" and definitions within the bill, such as "agricultural commodity," rely on references to other legal documents, which might complicate understanding for stakeholders. This complexity in determining eligibility and credit application could increase the likelihood of misinterpretations or errors.

In summary, while the "Grown in America Act of 2025" proposes significant financial incentives through tax credits, its impact could vary widely among industry players. The financial benefits are potentially skewed towards larger entities, with smaller producers facing challenges in meeting the escalating requirements and navigating the administrative complexities. The intricacies within the bill call for careful consideration and potentially further clarification to ensure a balanced and equitable approach.