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.
Very few farm families pay estate taxes but almost all large-scale farmers are worried that changes in the tax code will increase their exposure to capital gains or estate taxes, said a Purdue University survey released on Tuesday. The poll was conducted before the White House said nearly all …
President Biden proposed stricter application of capital gains taxes, potentially generating billions of dollars in federal revenue, on Wednesday by restricting use of the decades-old "stepped-up basis" that reduces liability on inherited property. Although the White House said it would not increase taxes on heirs who want to keep the family farm running, the largest U.S. farm group was skeptical that the protection could be fashioned into law.
During his campaign for the White House, President Biden said he would eliminate "stepped-up basis," which allows heirs to avoid capital gains taxes, and he is expected to carry out the pledge this week to pay for an expansion of social programs. Farm groups say elimination of the tax break would impose a burden on agriculture.
Despite its fearsome reputation, only a comparative handful of farm households are obliged to file a federal estate-tax return and most of them will not pay the government any money, said USDA economists. Large tax exemptions — $11.58 million per person in 2020 — shield most estates from tax liability.
When he used the power of seniority to claim chairmanship of the Senate Finance Committee in the new session of Congress, Iowa’s Chuck Grassley said he wanted greater tax fairness for Americans. Many farm groups share his goal of additional tax relief.
During a half-hour “bill passage event” that resembled a pep rally for the Republican-written and -passed tax bill, President Trump said farmers and small-business owners will benefit because “for the most part, [the] estate tax is wiped out.”
The tax bill written by the Republican-controlled Congress would deliver “near-term benefits to many ag producers, but rate reductions and estate tax changes beneficial to ag are temporary” and bring the risk of higher taxes in the future, says the accounting firm K-Coe Isom.
The $1.5 trillion tax-cut package unveiled by House Republicans would eliminate the estate tax – the most-hated tax in agriculture – in 2023, while allowing larger deductions for purchases of equipment, according to the Ways and Means Committee. Farm groups were muted in their comments as they assessed the 429-page bill.
The first overhaul of the tax code in three decades should result in a one-page tax return for most Americans, President Trump said in Missouri, while declaring that tax reform is the foundation of job growth. Agriculture Secretary Sonny Perdue said separately that the estate tax, a bugaboo of the farm sector, should be part of the overhaul expected to be a Republican priority in Congress this fall.