More than 40 national and regional agricultural groups in the Tax Aggie Coalition sent a letter to House and Senate leadership on Tuesday expressing concerns about the tax legislation proposals they say hold the future of family-owned farms and ranches.
The concerns are related to President Biden’s plan to target several provisions in tax legislation to finance infrastructure and human resources.
“We urge you not to change or remove the longstanding provisions of tax legislation that are fundamental to the financial health of productive agriculture and the companies that supply their inputs, transport their products and market their goods” , it says in the letter.
“With more than 370 million acres expected to change hands over the next two decades, the policies now passed by Congress will determine the ability of farm producers to secure affordable land to start up or expand” said the coalition.
“Regardless of whether a company has been handed down over several generations or is just starting out, the key to its longevity is its continued ability to transition when a family member or business partner dies. For this reason, we believe that the current exclusion limits for estate taxes must be respected, ”said the coalition.
The letter also highlighted three other tax regulations that the group said are important for farming and ranch families.
One of them is the strengthened basic determination of the value of land, buildings and livestock at the time of the owner’s death. The basis is the original purchase price plus adjustments such as depreciation and the value of the improvements. Current tax law allows an heir to increase their base in inherited assets to fair value without paying capital gains tax.
The second provision concerns similar exchanges, which enable companies to buy and sell similar assets without tax consequences.
The third provision is the corporate income deduction under Section 199A, which allows transit businesses – such as farms and ranches – to pay taxes below individual income tax rates as opposed to corporate income tax rates to deduct 20% from their income taxes.
“Agriculture is the backbone of many economies in rural America. It is important that Congress maintain sound tax policies for our country’s farmers, ranchers and family-owned agribusinesses,” said Colin Woodall, CEO of the National Cattlemen’s Beef Association, in one Press release.
“Ultimately, federal tax policy should help facilitate the transfer of agricultural land and not hinder this process. It is vital that the guidelines passed by Congress continue to enable the next generation – including novice, veteran and minority ranchers – to thrive, ”he said.
Zippy Duvall, president of the American Farm Bureau Federation, said farmers and ranchers are already facing uncertainty due to unpredictable weather and volatile markets.
“Sound tax policies should help them meet these challenges, not create confusion,” he said.
“Generations of farmers have relied on key tax rules like reinforced base and similar exchanges to grow their family businesses and eventually pass them on to the next generation,” he said.
Congress should refrain from creating tax regulations that make it difficult for farms and ranches to remain viable now and in the future, he said.