Hoeven Outlines Importance of Maintaining Stepped-Up Basis for Farmers and Ranchers
Senator Pressing Administration to Abandon Tax Plans Harmful to Ag Producers
WASHINGTON – Senator John Hoeven, ranking member of the Senate Agriculture Appropriations Committee and a senior member of the Agriculture Committee, today joined a group of Republican Agriculture Senators to speak on the Senate floor and outline the negative impact of the Biden administration’s proposed tax increases and elimination of stepped-up basis on the nation’s farmers and ranchers. The senator urged the administration to abandon its tax plans and maintain step-up-in-basis as well as the 1031 like-kind exchanges and other important tax provisions.
“Under current law, passing down a family business, farm or ranch to the next generation does not impose a tax burden on the business or its new owners. Rather, the tax basis in the business is “stepped-up” to fair market value, preventing a large tax bill on the next generation of farmers. In addition to increasing the tax bill on multigenerational farmers and ranchers, repealing stepped-up basis would add significant complexity to the tax filing process for farmers and ranchers,” said Hoeven. “With the average age of farmers nearing 58 years old, now is not the time to burden the next generation of farmers and ranchers with massive, complex tax bills.”
Hoeven cited a recent report from Ernst & Young that estimates repeal of stepped-up basis would result in the loss of 80,000 jobs in each of the first ten years after the repeal and loss of 100,000 jobs in each subsequent year. Additionally, a study by the Texas A&M Agricultural and Food Policy Center determined that more than 97 percent of the representative farms in its 30-state database, including North Dakota, would be impacted by a proposal to eliminate stepped-up basis, with average additional tax liabilities totaling nearly $725,000 per farm.
Hoeven also outlined the importance of maintaining the 1031 like-kind exchanges for farmers and ranchers. The Biden administration has proposed to eliminate the use of 1031 like-kind exchanges, a provision that has been in the tax code since 1921, which allows farmers and ranchers to defer taxes on land transfers when they continue their investment in similar, land assets.
In addition to his floor speech, the senator today joined the entire Senate Republican Caucus in urging President Biden to abandon efforts to impose a tax increase on farms and ranches.
Next Article Previous Article