Billy Long: The death tax hurts family farms

(From Seventh District Congressman Billy Long)

President Biden and the Democrats are proposing massive spending proposals that will increase taxes for most Americans. Their working theory seems to be 'What's mine is mine, what's yours is mine and what's your family's after you're gone is mine too.' Taxes that Democrats are most likely to increase are the estate and capital gains taxes. 

Essentially, the estate tax, commonly referred to as the death tax, is a tax on multi-million-dollar inheritances after someone passes away. Capital gains taxes are paid whenever someone makes a profit off a sale. While millions of dollars in inheritance seems like it would only affect a small number of Americans, the truth is, it affects the most essential American workers, farmers.

According to the American Farm Bureau, 98% of all farms in the United States are either individually or family-owned. These family farms provide vital resources to our nation, putting food on our tables which in turn keeps America running. It is largely thanks to our family farms that our food supply was not impacted by the COVID-19 pandemic. Many of these family farms are passed down from generation to generation, and when the owner passes away, their family is left to shoulder the burden of the estate tax.

What many people may not realize about the estate tax is that businesses with millions of dollars in assets don’t necessarily have millions of dollars at their disposal. When it comes to family farms, roughly 82% of the assets are illiquid, this includes land and buildings. 

To pay for these taxes, farmers may have to sell these assets, crippling their operation and sometimes losing their family farm. In 2017, Congress passed the Tax Cuts and Jobs Act, which doubled the estate tax exemption, going from $11 million per couple to $22 million. 

This gave farmers more breathing room and allowed them to remain in business. These tax cuts came with a sunset provision though and Congress must make them permanent if we are going to continue protecting family farms.

While family farms must pay an estate tax, the current tax code does not require them to pay capital gains taxes when passing down from generation to generation. Since 82% of farm assets are illiquid, most of the so-called gains are not seen by the farmers and are instead reflected in the value of the land. 

This exemption will change if President Biden gets his way. I mentioned that Democrats were on a wild spending spree. Their most recent plan is to spend $3.5 trillion on ‘human infrastructure’. 

To pay for this spending, they want to end the family farm exemption to capital gains taxes, which would see massive new tax burdens on our farmers. Texas A&M University estimates that these increases could be as much as $726,104 per farm. When you combine this with the already present estate tax, that would create a crippling tax burden on our farmers, forcing many to sell off land and give up generations of hard work to make ends meet.

Last year proved more than ever that we must do everything in our power to protect our farmers. Burdening them with taxes that could force them to sell their land is not protecting our family farmers. These spending proposals by President Biden and Speaker Pelosi will devastate our farmers. This is yet another case of rural America being an afterthought in Democrat’s legislative proposals.