Producers, lawmakers still concerned about tax policy impacts on farms
Many ag producers and Republican lawmakers are seeking answers about the Biden administration’s potential changes to tax policy.
Nebraska Republican Congressmen Adrian Smith says a repeal of stepped-up basis would increase the tax burden on producers. “Economic studies even after the proposed exemptions more than 95 percent of farms and ranches would be hit with the average tax bill in excess of $1 million and we would see 800,000 job losses in the first decade from this proposal all by itself.”
Stepped-up basis allows adjustments to the value of inherited assets when they’re passed on after death, which would reduce the capital gains tax owed by the recipient.
Smith hosted a Republican Roundtable Tuesday where members of the House Ways and Means Committee along with producers across the country testified on potential changes in stepped-up basis, capital gains taxes and the estate tax.
Nebraska farmer Don Batie of Lexington says repealing stepped-up basis would likely prevent him from passing on his farm to his daughters. “My daughters are now hoping to continue our farming legacy when I retire in four or five years. My wife and I currently can’t afford to sell them our farmland with a high capital gains tax we face. They’ll have to wait until we die to have that opportunity and they still may have to face the capital gains tax if the stepped-up basis is lost.”
Batie says if the tax code had changed in 2017 when he inherited 120 acres from his mother, it would have cost his operation. “If the capital gains taxed was assessed at the time of death and without stepped-up basis, we would be facing $164,000 in capital gains taxes on her $616,000 gain.”
Representative Jackie Walorski, a Republican from Indiana, says she’s “terrified” what the impact of potential tax changes would be on farmers in her district. “This would add yet another burden on family-owned farms and businesses when they are the most vulnerable after the death of a loved one.”
Republican Darin LaHood of Illinois says the proposal would eliminate nearly 800,000 jobs over the next decade. “I think about my family-owned farms, I think about those corn and soybean operators throughout my district and how difficult it is to already operate in the current environment. We need to think long and hard and raise awareness on this issue.”