NCBA on Biden’s proposed American Families Plan: “The devil is in the details”
The National Cattlemen’s Beef Association says the suggested changes to existing tax code to pay for President Biden’s proposed American Families Plan could be detrimental to agriculture. The American Families Plan would help families cover the basic expenses that many families struggle with today, from lowering health insurance premiums, and builds upon the American Rescue Plan’s reductions in child poverty.
Danielle Beck, senior director of government affairs for NCBA says there are proposed changes to two tax provisions that are critically important to America’s farmers and ranchers. “It would repeal the deferral of gains for real estate like-kind exchanges for any gains greater than $500,000 and eliminate stepped-up basis in gains excess of $1-million per person and $2.5 million per couple when combined with existing real estate exemptions,” she says.
But, she says the reform does include protections for family-owned businesses and farms, and they will not have to pay taxes when the business is given to heirs who continue to operate the business.
And while the President’s plan does not make any changes to the current estate tax exclusion limits, Beck says there are concerns with proposed changes, similar to the like-kind exchange. “The proposed changes they have identified to like-kind would absolutely have an impact on our producers’ ability to take advantage of this provision in the tax code,” she says. Also known as a 1031 exchange, a like-kind exchange allows for the disposal of an asset and the acquisition of a replacement asset without generating a current tax liability from the sale of the first asset.
She tells Brownfield ensuring the step-up in basis tax provision isn’t changed remains a priority, and is critical to the future of America’s farmers and ranchers. Stepped-up basis is a tax provision that allows land and other investments to pass from one generation to the next without capital gains taxation at the time of death.
“Any changes here are going to be significant, just given the fact that assets in agriculture are typically held by one owner for several decades,” she says. “And resetting that basis on the value of land, equipment, and livestock on the date of that owners death under the step-up, is really important for surviving family members.”
Beck says America’s farmers and ranchers should make sure their voice is heard as Congress works on an updated tax policy.
AUDIO: Danielle Beck, NCBA