Steube in Orlando Sentinel Op-ed: “Democrats’ tax plan leaves farmers behind”
SEBRING, FLA. – U.S. Representative Greg Steube (R-Fla.) penned an op-ed in the Orlando Sentinel criticizing the Democrats’ new tax plan and explaining the negative impacts such a plan would have on Florida’s family farmers.
“America’s agriculture should never be subject to political calculations,” Steube said. “Domestic food production has always been – and will always be – important for our country’s national security and economic success. Poorly thought through tax policy will disrupt America’s food supply and either result in shortages or highly inflated prices for all citizens.”
“Our farmers, ranchers, and producers typically face economic challenges from many things like commodity prices, weather, spikes in production costs, and crop diseases,” Steube continued. “Congress should take positive action to protect our domestic agricultural businesses instead of creating new burdens, like unfair tax policy of discriminatory debt relief measures.”
Steube’s op-ed follows reports of the Biden Administration and Congressional Democrats considering a change to the current step-up in basis tax provision for family farmers and ranchers.
The full op-ed can be found here or below.
Rep. Steube: Democrats’ tax plan leaves farmers behind | Commentary
By: Rep. Greg Steube
Farmers, ranchers, and producers in Florida and across the country do the important job of feeding America’s families. The agriculture industry is deeply rooted in America’s founding and continues to be a cornerstone of our economy and even our national security.
However, today’s Democrats have proposed new tax policies that threaten the economic stability of our agricultural families and communities.
Their proposed tax plan revisions target the financial foundation of family farms, ranches, and crop producers. At their core, the suggested changes create an enormous tax burden on the transfer and ownership of privately held land used for production.
In March, Senate Democrats introduced the ironically named Sensible Taxation and Equity Promotion (STEP) Act, which would codify President Joe Biden’s proposed change to the current step-up in basis for assets transferred at death. Simply put, this plan would tax farm assets at death, regardless if any land or other assets are sold.
Under current law, the step-up in basis provision benefits farmers because it allows the land to be valued or adjusted before it is inherited. This makes the subsequent capital-gains tax more affordable for farmers, ranchers and producers continuing their operations. Keeping affordable long-term capital gains tax rates are important because, unlike other industries, agriculture is unique in the sense that it is largely a generational family business.
If the Democrats’ change to this provision is enacted, the capital gains tax will be calculated based on the original value of the land, therefore causing the appreciation of value over time to be high and the tax to be hugely unaffordable for family farms. For example, if a family farm was originally purchased at market value in the 1930s but was inherited in 2021, the farmer would have to pay the tax calculated on the extra appreciation, rather than the adjusted rate for 2021.
With a tax rate of up to 43.4%, many farmers argue the only way to be able to pay the new tax would be to sell the farm and close down their operation and force them into a situation that is commonly referred to as land-poor.
Another misguided legislative proposal, the For the 99.5 Percent Act, would add insult to injury by creating an additional tax on land swap transfers, or 1031 exchanges. Farmers and growers constantly use land swap transfers to buy and sell land for their agriculture operations. In this process, selling or buying land is not to cash out a profit, but rather to trade business assets.
Farmers’ assets are typically tied up in land, machinery, and the like, causing them to rely heavily on cash flow. By not taking into account this common sense fact, tax proposals like these would make our domestic production of food far less practical and competitive.
D.C. Democrats justify this burdensome tax proposal as a tax on the rich, but this is not an accurate reading of agricultural economics. These new tax burdens would irreparably harm family farmers and the ranchers and growers responsible for feeding America.
In fact, a study released by Texas A&M’s Agricultural and Food Policy Center suggested that these two tax proposals alone could cost farmers and ranchers an untenable average of $1.4 million.
These new proposals also come on the back of other policies from the Biden Administration seeking to hike other taxes and provide debt relief solely for minority farmers.
Though the provision is being actively challenged in court, Section 1005 of the American Rescue Plan Act, provided debt relief only to farmers of color and those classified as “socially disadvantaged.” Not only is this policy highly discriminatory, but it fails to take into account the challenges faced by all members of the agriculture community. It also fails to address the hurdles farmers face that are created by our own federal policy shortcomings.
America’s agriculture should never be subject to political calculations. Domestic food production has always been — and will always be — important for our country’s national security and economic success. This is much bigger than just our agriculture industry. Poorly thought through tax policy will disrupt America’s food supply and either result in shortages or highly inflated prices for all citizens.
Our farmers, ranchers, and producers typically face economic challenges from many things like commodity prices, weather, spikes in production costs and crop diseases. Congress should take positive action to protect our domestic agricultural businesses instead of creating new burdens, like unfair tax policy or discriminatory debt relief measures.
Rep. Greg Steube, a Republican, represents Florida’s 17th congressional district in the U.S. House of Representatives.