Estate tax laws that don’t add up
In the nearly 30 years I've been covering agricultural issues, some topics seem to cycle back around depending on which political party is in power. One of those is estate tax regulations specifically stepped up basis or known as the inheritance tax. The latest proposed tax code revision coming from the Biden Administration which directly impacts farmers and ranchers is eliminating the stepped up basis as it relates to passing the farm down to the next generation. The current tax law states that when a person dies, families can leave certain assets to their heirs without being required to pay capital gains tax.
Back on September 10, our Big First District Congressman Tracey Mann (R-KS) introduced legislation in the House Agriculture Committee Budget Reconciliation Mark-up which would protect Kansas farmers and ranchers by preserving the stepped-up basis. Unfortunately, according to Mann, Democrats on the House Agriculture Committee rejected the protections and voted to tax farmers and ranchers over and over again on land their families have owned for generations – all in the name of paying for Biden’s $3.5 trillion spending plan.
Another U.S. Representative in Congress also points out in an op-ed piece from over the weekend how devastating this tax would be for those in production agriculture who she represents in northeast Iowa. U.S. Representative Ashley Hinson (R-IA) says, “The Administration has claimed that 95 percent of families won’t face any new taxes under their proposal. Well, let’s do the math. Say you’re a third-generation farmer, and your grandfather bought the family farm in 1950. To exceed the arbitrary tax threshold this Administration thought up, with the current value of an acre in Iowa averaging $7,559, a farm in Iowa would have to be less than 341 acres to avoid President Biden’s crushing taxes.”
Yet, another lawmaker said those who really understand farming, ranching and rural America tell us that the talking points officials are using simply do not add up. “By its own account, USDA now shows changes in stepped-up basis will saddle many family farms with millions of dollars in taxable gains that could be subject to capital gains tax rates as high as 43.4 percent,” says Sen. John Boozman, (R-AR). “According to USDA, family farmers and ranchers who would have an additional tax liability with the elimination of stepped-up basis, through either immediate or deferred taxes, are responsible for 65 percent of our nation’s agricultural production. Put simply, USDA’s own economists have shown that the administration’s plans pose a threat to rural America.”
A threat to rural America. I don’t take that lightly. I encourage you to contact Congressman Mann, and our Sens. Jerry Moran and Roger Marshall to let them know you support preserving the stepped-up basis for agriculture producers. Let them hear your voice in Clay County. It takes a grassroots effort to invoke meaningful change!