On Tuesday, Rep. Rick Crawford (R., Ark.) introduced H.R. 6167, the Farm Risk Abatement & Mitigation Election (FRAME) Act, to give farmers the option of taking disaster preparedness into their own hands. The FRAME Act would establish tax-deferred farm savings accounts that farmers could then withdraw from during difficult times without waiting on disaster declarations and government assistance.
In a conversation with Sean Williams, chairman of the Arkansas Bankers Assn., Crawford discussed the details of the legislation and how it would work in practice, including its impact on rural communities and banks. The video may be found here and the audio here.
“Farming is a risky business, and we don’t need to look any further than this past August for proof of that. From crop failure, changing markets, insect damage, unusual weather and natural disasters, producers’ livelihoods are threatened in many different ways,” Crawford said. “The FRAME Act would give farmers the freedom to invest in a personal account dedicated to disaster relief. These accounts would work much like an IRA (individual retirement account) or health savings accounts and would give farmers the option of investing.”
Like IRAs and health savings accounts, Crawford’s proposed FRAME accounts would allow contributions, capital gains and dividends to be tax-deferred. Farmers would then be able to draw from the FRAME account whenever they needed it to cope with a disaster, independent of government or state designation, which can often be slow in coming.
To encourage an initial investment, farmers will be eligible to write off FRAME account contributions on their tax bill. Contributions will be tax deductible up to $50,000 per year, and farmers will retain 10% of their contributions in the form of a tax credit during the first few years after opening the account.