Vilsack Says 98.9% of Farmers Won’t Be Impacted by Biden’s Tax Plan, Tax Experts and Economists Still Disagree

...The battled played out Monday, as Democrats have a series of bills they aimed to pass this week. The reconciliation bill includes the “human infrastructure” element as well as climate initiatives, childcare subsidies, Medicare expansion and more. Democrats are pushing for tax increases to help pay for the massive price tag but those tax changes are coming with major opposition from the GOP. Among the possible taxes measures are changes to capital gains, which are still causing a stir because many farm groups which argue the tax changes will cost family farms.

...USDA Secretary Tom Vilsack has gone on the offense, trying to set the record straight on how the possible capital gains tax changes would impact family farmers. Not only did he write an op-ed in the Wall Steet Journal earlier this month, but he made his case on AgriTalk with Chip Flory last week. Contrary to previous reports, he says nearly all family farms will see no impact from the possible changes to stepped-up basis.

Vilsack’s statement used a statistic produced by a recent USDA Economic Research Service (ERS) study, which showed 98.9% of family farm estates would not owe capital gains taxes when the principal operator dies, based on the proposed exemption levels, or be impacted by carryover basis. Furthermore, ERS points out their analysis of the tax changes found 80.7% of estimated family farm estates have total farm and non-farm gains less than the exemption, meaning they would have no change to their capital gains tax liability under the proposal.

The data —  and Vilsack’s statement on AgriTalk — contradicts a study done by Texas A&M University’s Agricultural & Food Policy Center (AFPC) that shows the Biden Administration’s proposed tax changes could be costly for family farms. The AFPC study found only two farms out of those studied would be immune to the proposed tax changes, and those two farms rent 100% of the land they farm. The remaining family farms would possibly have to take on more debt just to finance the higher tax bill.

“There would be a significant tax liability across all the farms that we looked at, except for two, so 92 of the 94 farms,” Joe Outlaw, co-director of Agricultural Food Policy Center and a Texas A&M economist, told Farm Journal after the report was released. “The one sure thing I can tell you is even with the projection of higher prices from FAPRI that we have right now, none of those farms can absorb this tax liability without having to refinance and go into debt. Not one. That’s the take-home.”...MORE