To be clear, no one likes paying taxes and while we all support programs to defense and basic public services, after that the wrangling begins. The Biden Administration is already looking at potential tax increases and there are a few ideas on the table. We though checking in with the Farm Progress PANEL would show how folks are looking at those ideas.
We asked "There may be changes to tax rules. Which worries you most?" And while there are some differences you're equally concerned – overall – about the three we raised.
More than two-fifths of those who responded are concerned about higher income taxes. And while there have been public promises on that score, to keep boosts in the tax rates targeted at folks making more than $400,000 per year, there's skepticism in the country.
One-third of respondents are concerned about the loss of step-up basis. This is an issue that a lot of people who don't farm don't understand. But it's one that can barrel through an estate plan like a runaway bull seeking freedom from the ranch. Right now, the death of a landowner sets the value of that land or farm to current market value, which can reduce the capital gains tax burden on heirs if land must be sold.
Doesn't sound like much, but if Granddad bought that ground for $200 an acre (it happens), but he dies and it's worth $6,000 an acre, right now you're not on the hook for the capital gains tax for that $5,800 price difference. Lose that protection and that could be a significant chunk of change. Which leads to our next worry.
About a quarter of those who responded are worried that capital gains taxes may rise. Which can impact your farm in several ways depending on how you manage assets on the farm. According to the American Farm Bureau Federation, which calls out information from an IRS report, in 2018 40% of family farms reported some capital gains or losses; that's compared to 15% for the average individual taxpayer.
Note, we didn't include "all of the above" as a choice in this PANEL, but it turns out many of those responding would have made that choice. Reason we left it off? We wanted a better look at some specifics.
Thanks to everyone who responded to this PANEL.
Be a part of the PANEL
The Farm Progress PANEL is your chance to share your thoughts on key issues. To take part, start by signing up for our daily mobile text service Farm Progress NOW. Just text FARM to 20505, then respond to the text you get back. Later in one of our daily texts we'll provide information about how to sign up for the PANEL. And thanks to the respondents for helping us out.