This column appears in the August 2021 issue of Potato Grower.
“A billion here, a billion there, and pretty soon you’re talking real money.”
That quote, popularly attributed to Senator Everett Dirksen, who represented Illinois in Congress from 1933 to 1969, almost seems quaint in this current age, where a single federal program can now easily surpass the trillion-dollar threshold.
As the country continues to recover from the pandemic, Congress and the administration are actively debating the type and size of additional relief the U.S. requires. A key consideration in determining the size of those packages is how to pay for them, and tax increases have been suggested for at least some of those bills. Unfortunately, some decision makers have put tax increases for family farms in their crosshairs as they seek “reforms.” To date, multiple proposals floated by the administration and members of Congress would rely on tax increases on family-owned and -operated farms or changes in how inheritance is treated to fund the increased spending.
For example, the Sensible Taxation and Equity Promotion Act (STEP Act)—introduced by Maryland senator Chris Van Hollen—proposes to eliminate stepped-up basis upon death of the owner. Another bill, the For the 99.5 Percent Act (S.994)—introduced by Vermont senator Bernie Sanders—would decrease the estate tax exemption to $3.5 million ($7 million per couple), among other things, with the goal to “end our rigged tax code and ensure the wealthiest people and largest corporations pay their fair share.” While it might be targeted toward the wealthiest 0.5 percent, farmers with even modest estates would likely end up paying substantially more if this act is passed.
A third proposal, this one put forth by the Biden administration, would require farms and ranches to shoulder the burden to pay for their $1.8 trillion American Families Plan. The proposal would mainly be paid for through changes to the tax code. Those changes, including increasing capital gains tax rates, increasing taxes on appreciated assets, and limiting the use of like-kind exchanges, would significantly burden family farms.
NPC is pushing back on these proposals along with other allied agricultural organizations. We are backed in these efforts by key congressional leaders who sit on the House and Senate Agriculture Committees.
In June, Texas A&M University released a report authored at the request of Pennsylvania representative G.T. Thompson, ranking member of the House Committee on Agriculture, and Arkansas senator John Boozman, ranking member of the Senate Committee on Agriculture, Nutrition and Forestry. The report titled, “Economic Impacts of the Sensible Taxation and Equity Promotion Act and the For the 99.5 Percent Act on AFPC’s Representative Farms and Ranches,” showed clear and significant tax increases for farmers of all sizes. The study concluded that, together, the STEP Act and the For the 99.5 Percent Act would raise taxes an average of $1.4 million on 98 percent of the farms analyzed.
“The data speaks for itself and should give pause to anyone considering this approach as an option to pay for new additional federal spending,” says Boozman. “If changes of this magnitude are pursued, as some have discussed, the economic harm it will cause will have a lasting impact on rural America.”
The report validates the concerns NPC and other agriculture organizations have raised with House and Senate leadership. In letters and conversations with members of Congress, NPC has argued that farms already reeling from the pandemic’s continued impact on their businesses should not be on the hook to pay for additional federal spending.
NPC opposes any and all proposals that would eliminate or undermine tax provisions necessary to protect family farms from being broken up or shut down. Repealing stepped-up basis and imposing a second death tax would have far-reaching negative impacts on family-owned businesses, their employees, and all those depending on them to deliver food to their dinner tables.
Now is not the time to impose additional burdens on those working every day to keep Americans fed, and NPC will continue to fight for family farms in order to keep the tax man at bay.