Ohio Farmer

Country Counsel: The outcome of the general election will go a long way toward determining the handling of these sunsets.

March 22, 2024

2 Min Read
Concept for the payment of taxes with scissors cutting paper
SUNSET CLAUSES: The Tax Cuts and Jobs Act includes built-in sunset clauses that will expire at a predetermined date, unless changed or extended by Congress and the White House. mizar_21984/Getty Images

by Ryan Conklin

Whether it is primary ads, campaign events or news coverage, by now you have undoubtedly determined that 2024 is a general election year. While there are a host of issues confronting the candidates, I am going to focus on one that is staying under the radar: taxes.

Rewind back to 2017, when a Republican Congress and President Donald Trump enacted the Tax Cuts and Jobs Act. To pass the law, several provisions included built-in sunset clauses. This means those provisions will expire at a predetermined date, unless changed or extended by Congress and the White House.

Some of the sunset-prone sections include:

  • income and corporate tax rates

  • rules for special deductions and the standard deduction

  • the estate tax exemption amount

  • depreciation

If allowed to sunset, these tax benefits will expire altogether or revert to pre-2017 tax law.

Looking back to my constitutional law class, the power to tax is vested in Congress alone. This means that a president cannot unilaterally change the Internal Revenue Code. It takes both houses of Congress and the president to approve tax changes.

The outcome of the upcoming general election will go a long way toward determining the handling of these sunsets. Engaging candidates on these issues is essential to ensure smart tax policy comes out of Washington, D.C.

Specifically, when discussing tax issues, take the time to thoroughly research platforms, proposals and potential solutions. For example, if a candidate proposes the complete elimination of estate taxes, it is possible that the elimination of stepped-up tax basis may follow. This could be damaging to farms of all sizes. Promotion of specific legislation, such as the Preserving Family Farms Act of 2023, is also a worthwhile endeavor.

Furthermore, the impact of these sunsets could have widespread ramifications on your tax planning. Personal income taxes, corporate taxes and estate tax impacts are all in play. This could require advanced planning for many farms and families, more advanced than the customary year-end meetings.

With estate tax planning in particular, families that are at risk of a taxable estate need to start working with their professional team immediately. Estate planners, accountants, financial advisers and other professionals are likely to be busy leading up to the sunset.

The threat of negative tax changes coupled with a down farm economy can deliver a potent one-two punch to farm families across the country. With the breadth of issues facing candidates, be sure to keep taxes on your mind as the election cycle heats up.

Conklin is an attorney and owner of Wright & Moore Law Co. LPA.

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