Democrat Elected Officials

“The billionaires’ tax is a bad idea whose time will never come. It’s mislabeled to give it a kind of populist appeal.”

“You can’t tax something that’s not earned. Earned income is what we’re based on. There’s other ways to do it. Everybody has to pay their fair share, that’s for sure. But unrealized gains is not the way to do it, as far as I’m concerned.”

“I would argue this transfer tax, which could be as high as 43.4 percent, is the worst idea that has been proposed in terms of its impact on agriculture in my lifetime. This proposal is a direct assault on agriculture because it will prohibit the transfer of a family farm from one generation to the next which is the last thing we should want to do.”

“I am very concerned that proposals to pay for these investments could partially come on the backs of our food, fiber, and fuel producers. In particular, “step-up in basis” is a critical tool enabling family farming operations to continue from generation to generation. The potential for capital gains to be imposed on heirs at death of the landowner would impose a significant financial burden on these operations.”

Meanwhile, on payfors: Sen. Jon Tester said that a Biden administration proposal to impose capital-gains taxes upon a person’s death after a $1M per-decedent exemption was unacceptable to him. “We don’t like that,” Tester said on Monday night. “That’s a non-starter.”

“The requirement to recognize capital gains at death runs the risk of forcing farms and ranches to sell part, or all, of a farm that may have been passed down for several generations in order to pay the tax burden. While the ability to simply sell a small part of an asset may work for those with shares of stocks, it would force farmers to break up land that may have been in their family for decades and seriously impact their ability to remain economically viable.”

“I am concerned that certain provisions of the administration’s tax proposal may unfairly impact Nevada’s small businesses and family-owned farms and ranches.”

“For me, it is what you’re doing, the totality of the package, and how does it affect the ability of growth to continue to take place. That’s how I’m judging it. Right now it seems like a rather high rate to me,” said Sen. Bob Menendez, a New Jersey Democrat and a member of the Senate Finance Committee, of the proposed capital-gains rate. New Jersey has one of the highest median household incomes in the U.S.

“Some of these farmers have had these farms in their families for generations, and now, if they go to pass on the farm to the next generation, anything over $1 million they would have to pay that capital gains tax on it.”

Agriculture & Business Stakeholder Organizations

“While the tax is being dubbed as a “billionaires tax,” historically taxes enacted under the guise of only affecting the wealthy, like the Alternative Minimum Tax, inevitably end up hitting the middle class. The proposed exemptions are unimportant considering the long term threat this form of taxation poses to family owned and operated businesses.”

  • Palmer Schoening, Chairman of the Family Business Coalition

“The value of many farms is tied up in land and equipment and most farmers don’t have large amounts of money on-hand to pay capital gains taxes. They could be forced to sell the farm or take out costly loans just to pay capital gains taxes.”

“Stepped-up basis protects family-owned manufacturers from significant tax bills when businesses are passed on to the next generation. As this report shows, repealing step-up could have a dramatic impact on small manufacturers across the country, potentially requiring families to liquidate businesses, leverage assets, or lay off employees to cover the tax hit.”

“Obviously all of those changes could have very severe negative consequences on Americas family farms and the value of the land and being able to pass that land and other assets from one generation to the next.”

“Eliminating step-up in basis would require small business owners to pay a new tax when a family business partner dies, and potentially force them to sell their business just to pay the tax and associated fees.”

  • Titus Brooks, National Federation of Independent Business (NFIB)

“There are more than 370 million acres expected to change hands in the next two decades. If we are to ensure that the next generation can build upon our hard work and dedication, Congress must prioritize common-sense tax policy for rural America and preserve long-standing tax provisions which allow family-owned businesses to survive.” … “Taking away these tools would be disastrous for agriculture producers. It will destroy the intensive preparations that we have made, using provisions like the stepped-up basis, to ensure the smooth passage of our property to the next generation.”

“The repeal of the stepped-up basis by imposing capital gains taxes at death would force many family-owned farms and ranches to liquidate assets to cover the tax burden and would be the final blow to many family farms.”

 “These tax increases Biden has proposed – limiting like kind exchanges and imposing a double death tax – would devastate Florida’s citrus industry. It’s not an exaggeration to say if they pass these exponential tax increases into law, Florida’s iconic signature crop would be history.”

  • Michael Sparks, Florida Citrus Mutual (statewide association of over 2,500 citrus growers)

“Farmers across Michigan are already facing uncertainty – from weather, to markets and the lack of labor. We urge congress to refrain from making changes to capital gains and step up in basis that will negatively impact farmers and other business owners in the rural community.”

“An individual who inherited a cattle ranch valued at $1 million from their grandfather, who originally spent $100,000 to buy the ranch in 1989, would have to pay taxes on the $900,000 in accrued capital gains. Passing a family farm from one generation to the next is extremely important to continue that next generation of farming and ranching so we know the tax burden that could create on our farmers and ranchers could be devastating.

“Under Biden’s proposal, the owners would have to immediately pay up to 43 percent capital gains taxes whether they actually sell the property or not. The IRS would then charge a 40-percent estate tax on what’s left of the property. Combined, the two taxes would result in as much as a 61 percent tax rate.”

“We just see that if the stepped-up basis went away, they’d be taxed on an asset that was purchased so many years ago, and at such an old value, that inflation is going to make their taxes so much higher than what they’d ever bargained for. Our ranch has been in our family for such a long time, the land has significantly appreciated in value since it was purchased. It’s not really fair to her, or any future generation, to pay taxes on the full increase in value from when it was purchased 150 years ago or whenever. Taxes shouldn’t drive someone out of business just because they may have to sell some land.”

“The president’s proposal would levy a much higher tax burden on the transfer of assets of family-owned businesses at death. This would threaten the ability of the next generation of Minnesotans to keep those family-owned grocery stores, restaurants, auto body shops, construction companies and farms up and running.”

“To ensure that future generations can continue to build upon the success of today’s farmers and ranchers, we must prioritize sound tax policy for rural America and specifically, preserve long-standing tax provisions for family-owned agricultural businesses.”

Academics & Economists

“This tax is just the latest attempt by the Democrats to reshape the tax code and pass a tax on unrealized gains. This new tax is similar to the wealth taxes pushed by radical progressives such as Senator Elizabeth Warren (D-Mass) and Bernie Sanders (I-Vt.).”

“Biden’s proposal would take the tax code in the wrong direction by imposing a complicated tax on a narrow segment of high-earning households in a way that’s never been tried, adding new compliance and administrative challenges for an already overburdened IRS while weakening the U.S. economy by raising the tax burden on U.S. saving and entrepreneurship.”

“The majority of the billionaire’s tax would likely be shifted to average Americans.”

“Our analysis of the STEP Act proposals to repeal the step-up in basis at death, make death a tax realization event, and increase the tax liability of trusts under the Biden Administration’s proposed 39.6% top capital gains tax rate (plus the existing 3.8% net investment income tax) shows significant negative impacts on the national economy. Driven by an increased burden on small and family-owned businesses and farms, higher financing costs, and lower labor productivity, we find close to 1 million annual job losses, 10-year decreases in economic output and GDP of about $2 trillion and $1 trillion respectively, declines of over $600 billion and $6 billion respectively in private investment and R&D spending, and about $1 trillion in foregone personal income, or up to $10,000 per household.”

“If Congress were to adopt a wealth tax without apportionment, the tax would inevitably be challenged. The court would likely hold it to be unconstitutional, and an unconstitutional tax doesn’t raise revenue. Congress would be wise not to build major tax changes on a shaky foundation.”

  • Erik M. Jensen, Coleman P. Burke Professor Emeritus of Law at Case Western Reserve University

“The Zombie Tax would compel many of these asset intensive family businesses to sell under pressure impacting not just heirs and family members, but also the jobs of longtime employees from factory workers and mid-level managers to ranch hands and research scientists. Ironically, it would also create opportunities for the same wealthy speculators proponents cite as the need for wealth taxes to scoop up these businesses at fire sale prices.”

  • Andy Puzder, Senior Fellow at the Pepperdine University School of Public Policy

“Biden’s double death tax would essentially destroy many family businesses and discourage older Americans from investing to create a legacy for children, but it would boost the sales of yachts and tourist trips into space.”

“Under current tax law, only two of the 94 representative farms would be impacted by an event triggering a generational transfer.” … “By contrast, under the STEP Act, 92 of the 94 representative farms would be impacted, with additional tax liabilities incurred, averaging $726,104 per farm.”

“These tax code changes would likely affect 50% to 70% of Illinois grain farms, with an average transfer tax liability of over $500,000 for those farms. Many farms would face over $1 million in transfer tax liabilities.”

“The elimination of the step-up basis provision is not a tax on the rich but the death of the backbone of our economy – family farms and businesses.  Family farms, ranches and other businesses are too important to New Mexicans to lose.  Hopefully, our representatives in Washington will fight to preserve the 100 year-old step-up in basis provision that has helped keep family farms and businesses as the mainstay of New Mexico’s economy.

“The Biden tax proposals are as unfriendly to family farms as anything I have ever seen, but useful for mega corporate agriculture as families are forced to sell land to pay their taxes.”

“Perhaps the biggest issue facing farm families is their ability to pass their farm business on to the next generation,” wrote Purdue economists Jim Mintert and Michael Langemeier, who oversee the monthly Ag Economy Barometer. The 95% response rate to questions about inheritances and estate taxes suggest “this issue is on the minds of nearly all ag producers.

[many farmers] “would not be able to pay taxes off immediately and would have to set up loans and pay them out over time to stay in business or sell off land.”

“Taxing these hard-working families upon their loved one’s death is an insult to the legacy of American farming — and a kick in the gut to our nation’s rebounding agricultural sector. Washington politicians shouldn’t make farming families suffer just to fill D.C. coffers.”

  • Bob Young, former chief economist for the American Farm Bureau Federation

 

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