It was only a matter of time before the US Department of Agriculture and its Rural Development Advisory Board (RDBA) came to their senses and decided to remove a section of the RDA that gave states and local governments the ability to levy taxes on rural development.
The RDBA had originally proposed that the RVA could be exempt from taxation if it had a population of at least 25,000, but the amendment, which has been in the works for months, has now been shelved.
In response, states and cities have vowed to keep their eyes on their own backyard as they try to retain their rural areas.
States like Michigan and Pennsylvania have announced plans to take the fight to the federal government, while states like Texas have launched an initiative to bring the RRA back.
The proposed change to the RCA was announced by Secretary of Agriculture Tom Vilsack during a Senate Agriculture Committee hearing earlier this month.
The change would have meant that states and municipalities could not levy tax on RVA in the same way they would levy taxes in other states, such as on food, tobacco, alcohol and gas.
But in the wake of the bill’s passage, some local officials were quick to claim the move would allow them to collect more money from the state.
“The state has been very active in trying to get it repealed, and this amendment will just make it harder for states to collect that money,” said Tom Smith, the executive director of the Wisconsin Coalition for Rural Development, a group advocating for rural areas to retain tax revenue.
The RDMA said in a statement on Monday that it will be seeking comment from stakeholders in the RMA’s deliberations on the proposal.
Meanwhile, the RDBA said in the statement that it has not changed its position on rural tax relief because the RTA was designed to provide flexibility for states and other local governments.
The proposal also includes a provision that would allow states to levy tax increases if they choose to do so, a provision the RDMA says was designed solely to encourage state and local government to make investments in rural areas and to ensure a tax burden is levied on rural residents.
RVA advocates say that such an approach is necessary for the RAA to be able to fulfill its stated purpose of encouraging economic growth in rural communities.
The RVA says it supports the RGA’s efforts to ensure that rural economic development is not hindered, but argues that it needs a fair way to assess how many tax increases and revenue cuts would be necessary to maintain and even grow its economy.
In a statement released Monday, the RFA said it will continue to oppose any effort to repeal the RBA and is working with its allies on a compromise that could allow for the removal of a number of sections of the RDCA.
According to the RDFA, states are entitled to levy their own taxes on a range of issues, including the cost of housing, property taxes, sales taxes, and excise taxes.
But it said it also is entitled to collect tax from RVA if they chose to do it, and that it does not believe there is a way to avoid a significant increase in revenue for RVA.
“The RGA has not taken any position on whether it is necessary to impose a levy on rural RVA to collect additional revenue,” the RDHA said.
“Rather, the purpose of the rural development section of [the RTA] is to help provide flexibility to states and their local governments to continue to pursue their objectives.”
As part of its efforts to retain rural development revenue, the US federal government has also established the Rural Development Tax Credit (RDTC), which is meant to offset some of the cost and tax burdens of RVA by providing credits to local governments and other tax payers to help them meet their rural development obligations.
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