“The Dividend Allocation Rule” Floor Statement

MR. PRESIDENT, America’s agriculture industry has not had it easy in recentyears. In Montana and other areas of the country, drought, low prices and the economicdownturn have hit our farms and ranches hard. Over the past few years Congress hasworked hard to help our nation’s smaller agriculture producers. However, there is morework to be done.

Senator Grassley and I recently introduced “The Tax Empowerment and Relief forFarmers and Fisherman Act” (TERFF) with the intention of giving farmers the tools tohelp themselves. One provision within that Act deals with the payment of dividends oncooperatives’ stock. Today we are introducing that provision on its own to empha theimportance of changing the dividend allocation rule.

Currently, the dividend allocation rule imposes an additional tax on the paymentof a dividend on capital stock from non-patronage earnings. This double-taxation isunfair and discourages outside investors.

Modifying this rule will make farmer cooperative s more competitive and providebetter access to capital. This piece of legislation will help revitalize farmer cooperativesby giving them the influx of capital needed to compete.

I look forward to working with my colleagues to enact the critical piece oflegislation.

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