Lawmakers from both sides of the aisle are joining farmers and ranchers in calling for the preservation of stepped-up basis, a tax provision farmers and ranchers rely on to pass their operations down to future generations.
Stepped-up basis allows a farmer to pay capital gains taxes only on the property’s increase in value since the land was inherited, not on the full increase in value since it was purchased by the farmer’s parents or grandparents. Without it, farmers and ranchers are worried their children and grandchildren will struggle too much with capital gains taxes to continue the family business.
A call to action from Farm Bureau generated 18,000 messages from farmers and ranchers to their representatives and senators. In addition, many congressional lawmakers, both Democrat and Republican, have been very vocal in their support for retaining stepped-up basis.
Earlier this summer, all 50 Senate Republicans wrote to President Joe Biden urging him to drop the elimination of stepped-up basis from his American Families Plan proposal. “If the functional benefit of the step-up in basis were eliminated and transfers subject to the estate tax also become subject to income tax, as you have proposed, many businesses would be forced to pay tax on appreciated gains, including simple inflation, from prior generations of family owners - despite not receiving a penny of actual gain. These taxes would be added to any existing estate tax liability, creating a new backdoor death tax on Americans,” the Senators said in the letter.
More recently, former Senator Max Baucus (D-MT) authored an op-ed in the Wall Street Journal in which he emphasized how devastating the elimination of stepped-up basis would be for family-owned businesses, ranches and farms. He called on fellow Democrats to preserve the stepped-up.
EDITOR’S TAKE:
We have shared in earlier editions of this AIR just how devastating removal of the stepped-up basis would be for the families of farmers/ranchers. Back in the day, before the step-up basis was enacted, it was not uncommon for farm families to have to liquidate some or all of their holdings simply to pay the taxes after the principal owner passed. Thank goodness it was changed and we trust will remain in place. Farming and food production is a strategic consideration for our country’s national security. It would be a huge mistake to burden farmers by reverting back to a concept that was detrimental to the family farm and our country. If you agree, consider letting your congressman or U.S. senator know that you also support the idea that farmers retain stepped-up basis for property transfer upon death.
