Wolff: More Questions Than Answers When It Comes To President’s Tax Proposal

President Biden’s proposed tax increases to pay for his infrastructure and social programs has many in farm country concerned, just as the President is winning buy-in for his climate change proposals. Farm groups like Biden’s ideas on rewarding farmers for climate-smart conservation practice but proposed new capital gains taxes could undermine that support. American Farm Bureau President Zippy Duvall said, “a bright caution light is flashing,” on ending stepped-up basis and increasing capital gains taxes that could “punish” hardworking farm families.

“Farm Bureau’s position is that current law is the best way to help farms and ranches transfer at death,” noted AFBF tax adviser Pat Wolff. “Under current law, all capital assets transfer without tax.” 

The President would instead impose a capital gains tax at death on gains of $1 million, or $2 million per couple, which Wolff said would essentially replace the stepped-up basis, while the capital gains rate would nearly double for households with income over $1 million.  USDA said most farms will owe no tax if they stay in the family, but Wolf isn’t so sure.

“This new proposal may allow that to happen, but it comes with a lot of strings and conditions, and we don’t know what those are yet.”

But, Wolff said thing is known: a tax hike would allow Senate Democrats to again use the streamlined legislative procedure called “reconciliation” to pass Biden’s infrastructure and social spending bills with no GOP votes. That’s assuming that all Democrats are in agreement, which Wolff noted, is currently not the case.

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