Rural Democrats ask that tax changes exempt farms
shares of stocks, it would force farmers to break up land that may have been in their family for decades and seriously impact their ability to remain economically via- ble,” the rural Democrats wrote. In addition, they said, such a change couldpresent “administrativedifficulties”
estates will not owe any tax at transfer, provided the farmstays in the family. The tax the remaining less than2%wouldowe, would be on their non-farmassets.” PatWolff, senior congressional relations director for the American Farm Bureau Federation, saidU.S. AgricultureSecretary
ByDaveKranz Warning of the potential impact on family farms and ranches, a group of 13 House Democrats—including five from California—hasurgedcongressional lead- ers to exempt family farms fromproposed changes in capital-gains tax policy. Congress will consider a variety of tax increases to helppay for proposed federal investments in infrastructure construc- tion, education and other priorities. Among theproposals: aplan thatwould eliminateor scalebackstepped-upbasis in capital gains taxes. The stepped-up basis provides a reset for thebasevalueof assets during intergenerational transfersof prop- erty, which can be particularly important for owners of family farms and ranches. In their letter, the 13 House Democrats saidarepeal of stepped-upbasis for capital gains and immediate taxation “could es- pecially hurt family farms, some of which have been in families for generations.” Therefore, themembers said, “we strong- ly urge you to provide full exemptions for these family farms and small businesses that are critical to our communities.” Addressed to House Speaker Nancy Pelosi, D-San Francisco, House Majority Leader StenyHoyer, D-Md., andWays and Means Committee Chair Richard Neal, D-Mass., the letter was led by Reps. Jim
Costa, D-Fresno, andCindyAxne, D-Iowa. OtherCaliforniarepresentativeswhosigned the letter were Julia Brownley, D-Westlake Village; Salud Carbajal, D-Santa Barbara; John Garamendi, D-Walnut Grove; and JoshHarder, D-Turlock. California Farm Bureau President Jamie Johansson said he appreciated the California representatives’ action. “In a closely divided Congress, it’s cru- cial for rural Democrats to use their influ- ence to assure policies don’t sideswipe farmers, ranchers and the employees and businesses that depend on them,” Johanssonsaid. “We appreciate the repre- sentatives’ leadership in calling attention to the potential impact these changes in tax policy could have.” While saying in their letter they support many of the concepts in the proposed in- frastructure and education bills, the rural Democrats warned that policies intend- ed to ensure large fortunes aren’t passed along without income taxes being paid could create an “unintended burden” on farms and family businesses. Arequirement torecognizecapital gains at death runs the risk of forcing farms and ranches to sell part or all of a farm to pay the tax burden, the letter said. “While the ability to simply sell a small part of an asset may work for those with
“Farms, ranches, and some family businesses require strong protections from this tax change to ensure they are not forced to be liquidated or sold off for parts.” —Rural Democrats in a letter to House leaders
due to complications in trying to deter- mine the value of assets such as farmland andmachinery. For those reasons, the rural Democrats urged House leaders “to take additional care” in considering changes to stepped- up basis for capital gains taxes. “Farms, ranches, and some family busi- nesses require strong protections fromthis taxchangetoensuretheyarenotforcedtobe liquidatedorsoldoff forparts,andthatneed is even stronger for those farms that have beenheld for generations,” the letter said. TheU.S. Department of Agriculture has said theadministration’sproposedchang- es tocapital gains taxes “won’t affect family farms that stay in the family.” Under the proposal, USDA said, “es- timates indicate more than 98% of farm
Tom Vilsack has told AFBF President Zippy Duvall that “family farms across America were protected from damaging tax code changes.” But Wolff noted that despite the pledge that farms that continue in familieswould be exempted, “there’s no details on how thatwouldwork—and so, it’s important to movewith caution.” Along with Axne and the five California representatives, the other members of Congress tosignthe letter toHouse leaders included Reps. Cheri Bustos, D-Ill.; Angie Craig, D-Minn.; AntonioDelgado, D-N.Y.; TomO’Halleran, D-Ariz.; Kurt Schrader, D-Ore.; KimSchrier,D-Wash.; andAbagail Spanberger, D-Va. (DaveKranz is editor of AgAlert.Hemay be contacted at dkranz@cfbf.com.)
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May 12, 2021 Ag Alert 21
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