Saving the Family Farm
Farming is a family business. It always has been. Most farmers have been working cattle, working the land, and feeding the world from the time they could walk. They’ve lived their entire lives working endless hours to live their dream, carry on the family farm, and hopefully pass it along to their children in better shape than when they inherited it. The President’s death tax proposal threatens to upend all of that.
The death tax is something I’ve been fighting for years. It just doesn’t make sense. We work all our lives to scrape by, pay taxes all along the way, and then hopefully pass something along to our children. For the life of me, I can’t figure out why the federal government thinks it’s owed something when we die. Death shouldn’t be a taxable event.
The latest proposal on the table is much worse than that. Eliminating the stepped-up basis—a little known tax provision most of us only learn about when we lose a parent or loved one—would, in-effect, supercharge the existing death tax.
Here’s how it would work. Let’s say a farmer bought 1,000 acres in 1987 for $680 per acre. Then, they pass away in 2021 and that land is worth $4,903 per acre. Under the Tax Cuts and Jobs Act of 2017, their descendants would owe a $0 tax bill on that. Under this new plan, they could owe about $1.5 million in capital gains taxes alone. Most farmers, including those with much larger farms than 1,000 acres don’t have that kind of cash sitting around. They’re land rich, but cash poor. In agriculture, it takes a lot of money just to make a little.
That could force some families to sell off massive portions of the farm just to pay the tax bill. Others, if they can’t get the land sold in time, could wind up watching the farm their parents, grandparents, and generations of their family built be sold on the courthouse steps. It’s heartbreaking and it could mean the end of the family farm as we know it.
Now, the Administration has promised a special carve-out for small businesses and family farms where the next generation keeps running the business or farm. What they haven’t done is offered any real concrete proposal to do that. Farmers have heard plenty of these empty promises before. I’m from the Show-Me State. I’ll believe it when I see it.
Until then, we should all stand up and make our voices heard. We cannot afford to let this happen. We’ve already lost far too many family farms, and this could good well be the final nail in the coffin. I won’t sit silent and watch this happen.