Biden proposed eliminating the “stepped-up basis” rule, which sees the government adjust appreciated values of a house or stock portfolio when passed down to the next generation as an inheritance. The rule protects heirs of properties under an $11.7 million threshold from paying what is known as a so-called “death tax” — a tax on the transfer of property after someone’s death.
Hawkins sent a letter to the president this week, opposing the resulting increased taxes for farm families and saying the elimination of the rule would nearly double the capital gains tax rate.
“Agriculture is the backbone of Missouri’s economy, and we strongly oppose efforts that would make it more difficult, costly, and burdensome for our farm and ranch families to thrive and plan for the future,” Hawkins said.
Even with Biden’s plans to defer the tax on family farms, the elimination of the stepped-up basis rule would drastically increase the tax burden for farmers, according to Hawkins.
The federal government estimates about $40 billion was kept in heirs’ pockets in 2020, and a collection of those monies could be used as a funding source for Biden’s hefty American Families Plan.
Biden has referred to the “stepped-up basis” as a loophole.
“Is it more important to keep these tax loopholes for millionaires — who are good people; they’re not bad folks — or would we rather put $7,200 in the pockets of working moms and dads every year if they have two children,” Biden said in remarks earlier this year.
“It’s not an inheritance tax,” Biden said. “It was a tax [that] was owed two seconds earlier. But that’s what ‘stepped-up basis’ means. It’s [when] a person passes away and leaves the stock … to their son or daughter; son or daughter don’t have to pay anything on that multimillion-dollar gain when they sell that stock. And that’s worth a lot of money.”
Hawkins referenced a study conducted on behalf of the American Farm Bureau Federation (AFBF) that found the changes would reduce the country’s GDP by $100 billion over the next decade and eliminate 800,000 jobs. A separate analysis found the change would raise taxes by $498 per acre on average in Missouri for farms owned by families since 1997 while families with longer ownership histories were expected to see larger impacts.
And a Forbes Advisor analysis predicted the tax could negatively impact middle-class Americans.
Six months into his tenure as president of the Farm Bureau, Hawkins has already weighed in on issues on the federal level; he testified before a congressional subcommittee last month, calling for greater access to affordable broadband in rural communities.
Kaitlyn Schallhorn contributed to this report.