As tax changes loom, farmers worry about the next generation

The Associated Press ^ | June 19, 2021 | By TIM GRANT, Pittsburgh Post-Gazette

[Oldeconomybuyer]

... President Joe Biden has proposed tax changes in order to pay for the American Families Plan, which provides government benefits and tax breaks for middle- and lower-income people.

Small-business owners are most concerned about increased taxes on capital gains — profits on the sale of assets — and on inherited wealth. Mr. Biden’s plan calls for nearly doubling the top tax rate on capital gains and eliminating a significant tax benefit on appreciated assets known as the “step-up in basis.” The combined tax rate increase could add up to 61% on inherited wealth.

For example, if someone dies after starting a business decades ago that’s now worth $100 million, under the current tax law, the business would pass to family members with no capital gains tax because the cost basis of the business is stepped-up to its current value at death.

Under Mr. Biden’s plan, the heirs would immediately owe a capital gains tax of $42.96 million based on the capital gains rate of 39.6%, plus the net investment income tax of 3.8%, minus the $1 million estate tax exemption. The proposal would reduce the estate tax exemption from $11.7 million to $1 million.

If the estate tax remains unchanged, the family would also pay an estate tax of 40% on $57.04 million of the remaining assets. Including exemptions, the estate tax would amount to $18.13 million.

The combined federal estate tax and capital gains tax liability would total $61.1 million on the heirs’ original $100 million inheritance. That’s without including state capital gains and estate taxes.

[Oldeconomybuyer]

[Mogger]

Family trusts, forming a corporation, passing on a business before death, etc.

A few ways to hopefully not pay the insane taxes.

[laconic]

Part of the reason His Fraudulency is pushing this is that it will force farmers to sell their land to Biden’s friends at places like Black Rock fund, Jeffrey Epstein’s friend Bill Gates and the Red Chinese who are gobbling up American land. If the Rs don’t put an end to this before it gets anywhere, they are worthless. And remember farm/ranch state senators like Tester in Montana, Sherrod Brown the leftwing goof in Ohio, and any Dem running for Burr’ seat in NC.

[hardspunned]

When you’re a kulak living in the new Soviet America, collectivization is going to hurt. Stalin outright starved ten million to death. Comparatively, Biden won’t be bad at all. I don’t think we have ten million farm families to starve out.

[Alberta's Child]

In my experience, almost every "family business" owned by someone I know that was facing a substantial estate tax bill wasn't really a family business at all. It was owned and managed by an older person -- often with a spouse -- but the kids had no interest in it. Usually the business was a successful retail operation, but the kids were all professionals as adults and never wanted to work the long hours in the business the way their parents did.

When you read these sob stories about families that are forced to sell the family business to pay the estate taxes, keep in mind that many of these businesses -- perhaps even most -- would be sold by the next generation anyway, for the reason I describe here.

[gov_bean_ counter]

The politicians will ensure that their vehicles for wealth transfer remain untouched.

[DAC21]

No worries that pencil necked evil Bill Gates will be there to pick up the slop for pennies on the dollar.

[Pining_4_TX]

It’s a bit creepy, but in this age of anything goes, marry all your heirs before you die.