Below is a press release from Senator Cindy Hyde-Smith:
U.S. Senator Cindy Hyde-Smith (R-Miss.) today said a new report provides more evidence that capital gains tax changes to help pay for President Biden’s $3.5 trillion tax and spending plan will hit family farms more harshly than the administration will admit.
The U.S. Department of Agriculture (USDA) report, The Effect on Family Farms of Changing Capital Gains Taxation at Death, confirms Hyde-Smith’s disbelief that eliminating the federal estate tax stepped-up basis rule would affect only 2 percent of family farms. The report indicates the President’s proposal would impose a new tax burden on a much broader swath of farms and ranch operations across the country.
“The USDA report effectively invalidates the administration’s claim that most family farms and ranches would be held harmless by the Democrat’s scramble to pay for their $3.5 trillion spending spree,” Hyde-Smith said. “It only makes sense that a significant reduction in estate tax exemptions will place unacceptable new tax burdens on families that own and operate farms and ranches.”
Instead of just affecting 2 percent of farm operations, the USDA Economic Research Service analysis indicates that 17 percent of small farms, 66 percent of midsized farms, 80 percent of large farms, and 96 percent of very large farm operations would have a new tax burden with the elimination of stepped-up basis. The additional taxable gain on farm assets across all affected estates averaged $1.8 million per farm family.
Hyde-Smith joined fellow Agriculture Committee members this spring to begin pressuring the USDA to prove the claim that the estate tax change would only affect 2 percent of farms. The Senator has continued to warn that eliminating stepped-up basis would target generational farm and ranch operations, most recently at a hearing on dairy policies.
A Texas A&M University Agricultural and Food Policy Center study released in June showed that eliminating stepped-up basis would affect Mississippi family farms and ranches the hardest, with an average $4.6 million additional tax liability per farm.
American Farm Bureau Federation, National Federation of Independent Business, National Cattlemen’s Beef Association, Associated General Contractors of America, National Association of Manufacturers, and the U.S. Chamber of Commerce support efforts to convince the Biden administration and congressional Democrats to drop plans to increase capital gains tax rates that harm family-owned operations.