NMPF Objects to Proposal Raising Taxes on Farm Assets
June 2, 2021
NMPF joined other key agriculture stakeholders on May 10 in sending a letter to the top Democrat and Republican in each chamber of Congress, urging them to not alter or eliminate long-standing tax code provisions fundamental to farm businesses.
“Because assets in agriculture are typically held by one owner for several decades, resetting the basis on the value of the land, buildings, and livestock on the date of the owner’s death under a step-up in basis is important for surviving family members and business partners to ensure the future financial stability of the operation,” said the groups in the letter, which came from NMPF and organizations including the American Farm Bureau Federation and the National Association of State Departments of Agriculture. The letter was addressed to House Speaker Nancy Pelosi, D-CA; House Minority Leader Kevin McCarthy, R-CA; Senate Majority Leader Chuck Schumer, D-NY; and Senate Minority Leader Mitch McConnell, R-KY.
Woven throughout Congress’s discussion of a broad, multi trillion-dollar infrastructure package are proposals for how to pay for the bill’s programs and projects, including several changes to the tax code. Two potential tax-code changes could impact farms and farmer assets in specific, yet common circumstances. The first would alter estate tax provisions, which could increase the taxes paid on inherited farm assets. The second changes how capital gains are taxed – repealing the “step-up basis” currently used – which could increase the taxes due on capital gains made on farm and farm-related assets.
While NMPF recognizes the importance of investing in the nation’s infrastructure, the negative impact of these proposed tax changes on producers and their businesses is too vast. These changes could make it more difficult for dairy producers to continue their operations without tax-caused disruption, including buying and selling land and other assets and for families to hold on to their farms through generational changes.
NMPF also joined 115 groups on May 25 organized through the Family Business Estate Tax Coalition (FBETC) in calling on the Leadership of the Senate Finance Committee and the House Ways and Means Committee to oppose these proposed tax changes. “Repealing stepped-up basis by imposing capital gains taxes when assets transfer ownership at death would force many family-owned businesses to liquidate assets or lay off employees to cover the tax burden,” the group’s statement then said. The coalition then urged committee leaders to “protect family-owned businesses from tax increases by defending stepped-up basis and opposing any changes to current law.”
NMPF was pleased to see both Democrats and Republicans in the House send their own messages to their chamber’s leadership, calling for both proposed changes to be dropped from consideration in infrastructure discussions, and will continue to be active in the discussions as they evolve.
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