Q&A: Craig Regelbrugge on how the tax bill affects the horticulture industry

Departments - Industry Voices

AmericanHort’s senior vice president shares how the legislation will affect the industry, what AmericanHort lobbied for, and more.

February 5, 2018

Photo courtesy of AdobeStock
Photo courtesy of AmericanHort

While Republicans in Congress were writing and passing their tax reform legislation, AmericanHort senior vice president Craig Regelbrugge was on Capitol Hill talking to leaders, working to understand the overhaul of the tax code and advocating for aspects of the bill that matters for the horticulture industry.

“We devote a lot of time to developing and sustaining relationships,” Regelbrugge says. “We’re hearing and we’re talking to folks directly providing input getting feedback and then also through more traditional sources.”

Below, Regelbrugge answers questions about AmericanHort’s focus, what the new tax bill means for industry members and more.

Greenhouse Management: What did AmericanHort lobby for when Congress was debating the tax bill?

Craig Regelbrugge: We’ve been focused on a relatively narrow subset of provisions of things that were in the bill that we were hoping would stay in the bill. Trying to keep them [on], or to keep them off the table. For our industry, and particularly for the grower community in our industry, though not exclusively growers, the ability or the right to choose to use the cash method of accounting as opposed to accrual accounting is very important and particularly so for nursery growers or people who are producing crops that have a multiyear production cycle. The ability to use cash accounting basically means that the growing inventory in the nursery is not considered to have any value for IRS purposes until it’s ready to be sold.

Another example of something that we were paying attention to and working to preserve and improve on is the ability to expense investments in equipment. We were focused on every aspect of the bill, but we were paying very close attention to the things that matter the most to us.

GM: How does the estate tax — a tax on the transfer of a deceased person's estate — fit into AmericanHort’s goals for the tax bill?

CR: We’ve long supported a full repeal of the estate tax. I think where we ended up, the doubling of the estate tax exemption [Editor’s note: An individual can now leave up to $11.2 million in a will without it being taxed.] is a significant margin of protection to many of our businesses that are trying to pass along high-value assets.

GM: The corporate tax rate dropping to 21 percent is also something that has been at the forefront of debate surrounding the bill. Its proponents say will spur growth in the U.S. Do you have a read on how that will affect the horticulture industry specifically?

CR: First of all, on the tax issues, I’m playing second fiddle here. Our primary staff who met on with leaders on tax issues was [director of government affairs] Tal Coley. who joined our staff back in August. But we also must be smart about where we focus finite resources. We’ve chosen the tax base to affiliate with a broader group called Farmers for Tax Fairness, which is focused particularly on some of the agricultural aspects of tax reform, and we buddied up with the coalition to have more bandwidth and more access. I’m not comfortable speaking as to how individual companies’ bottom lines are going to be affected. We do have entities in the industry that are organized as corporations. For topline businesses, there’s rate reduction and some people may benefit. The alternative minimum tax is probably a significant factor on the corporate side.

GM: AmericanHort worked to get people involved at Impact Washington, and since then, on the various issues affecting the horticulture industry. Have you found those efforts to be successful?

CR: It’s an ongoing challenge. The reality we face is that a limited subset of folks in the industry, time and again, are the ones who understand that every decision that our government makes yields a winner and a loser. And if you’re not on the playing field making your case, you’re probably going to lose. Too few people in the industry are focused on what they’re doing, and they’re not taking the time when there’s a crisis. It’s easy. [Regarding] labor, we’ve got an active grassroots campaign going on right now to bring support for H-2B cap relief. We’re getting a lot of traction and we’ve amplified our own voice as AmericanHort with our membership because of the partnership we have with all the state organizations in the industry.

We’ve been able to sort of leverage a broader voice and we’re getting [a] very good response, I think, on the tax thing. On one hand, I think a lot of folks are cynical that their voice doesn’t make a difference and they are shrugging their shoulders saying, “I’m just one person. How can I affect change?” On the other hand, we had 100 people in town for a legislative summit back in September and we spent a good deal of time doing House and Senate office visits and [on] the tax issue. The tax bill was high on the list, and preserving a grower’s right to use cash accounting was our No. 1 talking point. And I really believe that those hundred people did a world of good because they visited several hundred offices and made the case as to what a change in policy on a cash economy would ultimately do to our industry. And there’s nothing more effective than that personal direct engagement by folks who are real world, running businesses, making payroll [and] paying taxes. So, hopefully when people see that some good came out of this, they’re going to pay a lot more attention next time.

This interview was edited for style and clarity.