There is an alarming plot twist in the great federal tax overhaul debate: the bill to create 111,000 jobs in California actually threatens a near-equal number of existing jobs – 97,000 of them right here in the Central Valley in the almond industry, a contributor of more than $1.4 billion to the Kern County economy.
This overlooked threat gives great urgency for Congressional Reps. Kevin McCarthy and David Valadao and their colleagues to safeguard an essential economic driver in the federal Tax Cuts and Jobs Act that keeps tens of thousands of Californians working. In a region where general unemployment levels are double the national average, the preservation of jobs needs urgent attention.
At risk is a program related to exported goods that could get the tax ax in the well-meaning but rapidly moving federal tax package. The overhaul promises to bring simplicity and tax relief to Americans, especially those in the Central Valley of California. The many benefits are well stated by Congressional representatives here, particularly on the jobs front. After all, the idea of adding another 111,000 jobs to keeping people working is beneficial to families, local economies, the state and the nation.
But a long-standing provision in the current tax code is going largely unnoticed and could be lost if not singled out for preservation: It’s called IC DISC — for interest charge domestic international sales corporations — and is critical to the $5 billion California almond industry’s ability to continue to operate as a vibrant employer. Congress created IC DISCs in 1971 to encourage U.S. exports, and shaped an opportunity for agribusiness, food and beverage companies to lower federal taxable income with dividends while helping address the trade deficit.
So far, the House measure contains the IC DISC program, while the Senate package does not. IC DISCs were burdensome administratively for many years and the act went unused by many, including the almond industry until the early 2000s. Today, those in the almond industry rely on the IC DISC as a tool to afford massive almond export numbers and contribute to the economy:
• Fully 70 percent of the California almond crop is exported.
• California provides 100 percent of the North American almond supply.
• 80 percent to 85 percent of the world’s almond supply comes from California.
It is no wonder that California’s number one valued exported agricultural crop is the almond. All of this is essential to California’s economic health and well being, where the almond industry accounts for $21 billion in gross revenues across all industries and contributes $11 billion to California’s total economy.
The various arms of the California almond industry are well-established job creators in the Golden State. They reach from growers to shellers, packers to processors and shippers. Communities such as Bakersfield, Visalia, Hanford and Fresno are home to many people holding both direct California almond industry jobs, of which there are 21,000 statewide, and indirectly with more than 100,000 jobs.
The most significant impact on Central Californians should the IC DISC end up amputated from the final tax overhaul package is the loss of these jobs for almond industry workers, other agribusiness industries, and their families. The ripple effect that this has in local communities, in shops, restaurants, providers of goods and services, could be devastating.
Central California is yearning for some strong voices of leadership to protect that which is working in this high profile tax cut effort so they can keep working, too. The people of Kern County need and want to work.
Mike Mason is a first generation almond farmer and partner of Supreme Almonds of California, a family owned and operated almond handling operation in Shafter. Kelly Covello is the President of the Almond Alliance of California, the only trade association fully dedicated to the almond industry.