Posted on 08/10/2021 5:13:01 AM PDT by gattaca
Under Biden's change, heirs would be forced to pay taxes on the appreciation of assets, potentially over the entire lifetime of the recently deceased relative.
President Joe Biden has proposed amending the inheritance tax, also known as the “death tax,” but farmers around the country are raising concerns about the plan.
In the American Families Plan introduced earlier this year, Biden proposed repealing the “step-up in basis” in tax law. The stepped-up basis is a tax provision that allows an heir to report the value of an asset at the time of inheriting it, essentially not paying gains taxes on how much the assets increased in value during the lifetime of the deceased. This allows heirs to avoid gains taxes altogether if they sell the inheritance immediately.
Under Biden's change, heirs would be forced to pay taxes on the appreciation of the assets, potentially over the entire lifetime of the recently deceased relative.
The tax change is targeted at wealthy heirs receiving their parents' fortunes. Generational farmers, though, say the repeal of this provision will leave them with a hefty tax when their parents pass away and hand down the family farm.
“When it comes to passing down a family farm to a niece or a nephew, the tax liability can result in selling the whole farm or significant pieces of the farm off simply to pay the tax bill,” said Chris Hagenow, vice president of Iowans for Tax Relief. “There is no question that an inheritance tax is a significant burden on families' farms and their continuity.”
Biden’s proposal applies only to inheritances totaling more than $1 million, but the total value of the large plots of land owned by farmers can put them in that category.
“Democrats have pledged to repeal ‘stepped-up basis,’ which is what makes it possible for a family business – like a farm – to pass from one generation to the next without being forced to sell off assets to pay an enormous tax bill to Washington,” Ways and Means Minority Leader Rep. Kevin Brady, R-Texas, said.
Economic Impact
Aside from the personal impact on farmers, the new rule could have significant impact on the economy overall.
The Family Business Estate Tax Coalition released a study in April that reports taxing gains at death will reduce GDP by $10 billion annually and cost 80,000 jobs each year.
The report said the tax changes would “lower wages given that about 1/3 of the burden of the tax increase is shifted onto labor because the tax-induced reduction in investment makes labor less productive.”
Brady said the plan would cost one million jobs in the next 12 years.
“Democrats’ proposal to repeal stepped-up basis encapsulates everything wrong with their entire tax agenda,” U.S. Rep. Adrian Smith, R-Neb., said. “They have proposed doubling the capital gains rate to nearly 40% in the name of so-called ‘fairness,’ rather than prioritizing economic growth or even revenue.”
Biden has defended his plan as a way to raise revenue needed for infrastructure and other projects.
Republicans’ hard push against the new proposal suggests they still see it as a real threat. The entire Republican caucus in the Senate sent a letter to the Biden administration in July warning him not to hit farmers with this tax.
“These [proposed] changes are a significant tax increase that would hit family-owned businesses, farms, and ranches hard, particularly in rural communities,” the senators wrote. “These businesses consist largely of illiquid assets that will in many cases need to be sold or leveraged in order to pay the new tax burden. Making these changes could force business operators to sell property, lay off employees, or close their doors just to cover these new tax obligations. The complexity and administrative difficulty of tracking basis over multiple generations and of valuing assets that are not up for sale will lead to colossal implementation problems and could also lead to huge tax bills that do not accurately reflect any gains that might have accumulated over time."
Opposition to the tax hike proposal has seen rare bipartisan support. A group of 13 House Democrats sent a letter to Democratic leadership calling on them to exempt farmers from the potential repeal of stepped-up basis.
“Farmers responsibly pay taxes to contribute their fair share to our country,” said U.S. Rep. Jim Costa, D-Calif., a third-generation family farmer. “They should not have to face tax burdens to pass their land from one generation to the next. This is how we keep generations of families farming. Therefore, we need to maintain protections to ensure the long-term success of family farms. They are the backbone of economic activity in rural areas, and we know the production of food and fiber is a national security issue.”
In the future, you will own nothing. Blackrock will own it all. And you will be happy.
That's the whole purpose. Force the children of the Mom & Pop farms to put the property up for auction, so Biden's pals can scoop it up.
The government already controls, regulates and taxes everything. Now they want to own it all.
Destroy the middle class. The leftist’s dream. A return to a feudal society where they own you.
RINOs are the reason for the woke clown world we live in. If the RINO-controlled state legislatures had enforced voter ID, then Trump would still be president and the Senate would still be controlled by the GOP.
Donate directly to Trump-endorsed challengers to these traitors in the 2022 primaries.
No enumerated power given the federal to even have an estate tax.
Progressives are scum.
Another step to drive people out of the conservative rural areas and into the urban liberal areas to better force control and right-think on the population. This will also help grocery stores up their backroom production and packaging of food. Grocery store food production is the wave of the future - farms are so yesterday.
Could you not incorporate the farm and have the business own the land and buildings? Family members can come and go from the business.
It's a "wealth tax". The asset appreciation mainly comes from inflation, which the gov't causes.
Think of it this way:
Imagine if I bought $1,000 worth of Microsoft stock years ago and it is now worth $1 million. Under the existing tax code, I would pay a capital gains tax based on a $999,000 gain if I sold it now.
Now imagine if the parents of the guy next door to me bought $1,000 worth of Microsoft stock years ago, then passed it on to him when it was worth $950,000. Under the "step-up" provision of the tax code, if he sold it today he would only pays a capital gains tax on the $50,000 difference between the $1 million current value and the $950,000 stepped-up cost basis.
This is patently ludicrous no matter how you look at it.
What a horrible idea.
Democrats are like an invasive plant species. They spread their taxes everywhere, destroying everything.
Signing such a law should be the signing of his own death warrant.
The agents of the people are the enemies of America
Ownership interest is taxed whether it is direct or indirect.
“Could you not incorporate the farm and have the business own the land and buildings? Family members can come and go from the business.”
Some states do not allow corporate ownership of farms.
I saw a farmer on TV supporting Biden prior to the election, perhaps from Iowa - I hope he’s happy with his vote and vocal support.
Abolish the income tax and IRS and this problem goes away.
But I digress.
See tagline.
Under present law, most people did not keep the records that would be necessary under the coming law, and so the heirs will be taxed on the whole thing.
This is nothing more than confiscation of property. Notice how rich sobs like soros, gates, bezos, clinton and obama will not be affected.
In every single case I know about, there were plenty of perfectly legal and reasonable steps that could have been taken before the IRS got involved, but nobody in the business was smart enough -- or motivated enough -- to do it.
In one particular case I know with 100% certainty that a family member of mine begged and pleaded with the business owners to do some basic estate planning and set up some business transition plans while they were still alive. The two brothers who ran the business were great at what they did but were apparently dumber than dirt in every other aspect of life. When one brother died, the business was shut down within two months because the surviving brother didn't want to deal with his sister-in-law as a partner who had no role in the operation of the business.
No, you are wrong.
Death taxes are independent of the income tax and could be collected by another agency
There is no justification for the death tax except the greed of the worthless Americans who are inferior to those with assets. Those worthless Americans are the vote treasure trove of the leftist politicos
Those who are by nature unequal covet the assets of their betters
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