President Joe Biden’s American Families Plan includes potential tax increases for farmers and ranchers. Micheal Clements shares more on what that means for agriculture.
Clements: The American Families Plan includes some tax changes of interest to agriculture. American Farm Bureau Federation Senior Congressional Relations Director Pat Wolff says there are three changes in the bill that could mean higher taxes for farmers and ranchers.
Wolff: One is an increase in the capital gains tax rate, that would apply to any sale of land or buildings. The second is a curb on the ability of farmers to sell one asset and buy another without paying capital gains taxes, that's called like kind exchanges, and the third is a new capital gains tax at death, and the repeal of stepped up basis.
Clements: Wolff says the new capital gains tax at death comes with a promise that family farmers who meet certain qualifications would be exempt. AFBF President Zippy Duvall recently spoke with Agriculture Secretary Tom Vilsack on the issue.
Wolff: AFBF President Duvall did have a conversation with USDA Secretary Vilsack about the proposed changes to tax law and Mr. Vilsack did say that he would work to make sure that family farms across America were protected from damaging tax code changes.
Clements: Under current law, heirs inheriting farmland are allowed to increase the tax basis of the property to fair market value without paying capital gains tax.
Wolff: Preserving that, which is called the step up in basis, as it is, is the best outcome for farmers and ranchers. The proposal on the table comes with the promise that farms that continue in families won't have to pay, but there's no details on how that would work. And so, it's important to move with caution.
Clements: Learn more about the stepped up basis at fb.org. Micheal Clements, Washington.