Thirteen House Democrats representing farm districts asked party leaders on Thursday to exempt farmers from President Biden’s proposal to apply the capital gains tax more stringently. Iowa Rep. Cindy Axne, one of the organizers of the letter, said “a significant number of Democrats” support the farmer exemption.
At the moment, Democrats have a six-seat majority in the House and cannot afford dissension if they want to pass a bill over unified Republican opposition.
According to a Purdue University poll, 95 percent of large-scale farmers, who dominate U.S. agriculture, are “somewhat” or “very” concerned about the possible elimination of “stepped-up basis” in calculating the value of inherited property. Under stepped-up basis, property is assessed at its current value rather than the price when it was acquired. Capital gains taxes would go up if the tax break was ended, and potential liability for estate taxes would increase.
“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, and that need is even greater for those farms that have been held for generations,” said the letter to House Speaker Nancy Pelosi, Majority Leader Steny Hoyer, and chairman Richard Neal of the House’s tax committee.
As part of paying for infrastructure and jobs programs, Biden proposed eliminating stepped-up basis for capital gains that exceed $1 million per person. “The reform will be designed with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business,” said the White House.
“We strongly urge you to provide full exemptions for these family farms and small businesses that are critical to our communities,” wrote the 13 Democrats.
There is an $11 million-per-person exclusion on estate taxes at present. It drops to $5 million per person in 2026.
To read the letter, click here.