Washington, D.C. – Representatives Michelle Fischbach (MN-07) and Adrian Smith (NE-03) today led more than 130 of their House of Representatives colleagues in sending a letter to Speaker Nancy Pelosi and Republican Leader Kevin McCarthy opposing the Biden Administration’s proposal to repeal stepped-up basis from the tax code and require payment of capital gains taxes at death.
Read the full letter here.
“President Biden’s plan to eliminate stepped-up basis and assess capital gains taxes at death would be devastating for the agricultural economy and would have a disproportionate effect on rural districts like the one I represent,” said Rep. Fischbach. “Without a step-up in basis, the next generation of farmers and ranchers will absorb massive tax increases just to continue their family farm. I cannot and will not support a tax plan that pads the federal coffers at the expense of America’s farmers, and I urge President Biden and House Democrats to reconsider his proposal.”
“Small businesses, farms, and ranches are the lifeblood of America, creating jobs and economic opportunity across our country,” said Rep. Smith. “Protecting stepped-up basis across generations and ensuring capital gains taxes are only collected upon the sale of an asset are vital to ensuring local, family-owned businesses remain local, family-owned businesses, supporting and creating jobs in their home communities. Our focus should be on tax policies which encourage small businesses to create jobs; not on punitive taxes which could force families out of business.”
“America’s farmers and ranchers rely on the stepped-up basis tax provision to pass their farms on to their children,” said Zippy Duvall, President of the American Farm Bureau Federation. “Eliminating it could force families to take out costly loans or sell their land bit by bit just to pay the taxes. We urge Congress to leave the stepped-up basis tax provision untouched to ensure a lifetime of hard work and sacrifice helps the next generation of farmers to thrive.”
“Minnesota Farm Bureau greatly appreciates Representatives Fischbach and Smith’s leadership on raising concerns with any attempt to repeal stepped up basis and taxing capital gains at death,” said Kevin Paap, President of the Minnesota Farm Bureau. “Eliminating the stepped-up basis would lead to more consolidation of agriculture and several family-owned farms would be forced out of business because of the increased tax liability. Stepped-up basis helps pass family farms on to the next generation and should be preserved.”
“Nebraska’s farm and ranch families truly appreciate the efforts of Congressman Smith, Congresswoman Fischbach, and the over 130 members of the House who signed onto this important letter clearly stating their support for continuing stepped-up basis,” said Mark McHargue, President of the Nebraska Farm Bureau Federation. “The elimination of this important tax provision is simply another attempt to make death a taxable event. No farmer, rancher, business owner, or family should be forced to sell parts of their business or any asset just to pay the federal government. We believe this sends a powerful message to all of those in Washington who are pushing for tax increases that will harm family farms, ranches, and businesses which provide jobs and support Nebraska communities.”
“ASA has long advocated for needed improvements to infrastructure vital to agriculture’s success in the years ahead,” said Kevin Scott, President of the American Soybean Association and farmer from South Dakota. “Yet, progress cannot come at the very expense of those trying to abettor our American economy—the farmers who work every day to assure our crops stay competitive on the global market. We have grave concerns over elimination of stepped up basis or any changes to the basis process that are not thoughtful as to the real repercussions on our U.S. farm families.”
“When considering how to offset the cost of a comprehensive infrastructure package, it is essential that Congress preserve sound tax policies for our nation’s cattle producers. We are grateful to Representatives Adrian Smith, Michelle Fischbach, and the other Members of Congress who are committed to ensuring that future legislative proposals to generate revenue do not adversely impact the viability of family-owned agricultural operations," said Danielle Beck, Senior Executive Director of Government Affairs for the National Cattlemen's Beef Association. "We firmly believe this effort is an important first step towards safeguarding critical provisions in the tax code like stepped-up basis and look forward to working with all Members of Congress to enact commonsense policies that ultimately preserve a sustainable and vibrant business climate for generations of farmers and ranchers to come.”
“Repealing stepped-up basis is not a free lunch for those looking to generate tax revenue and would have significant consequences in the multifamily marketplace,” said Doug Bibby, President of the National Multifamily Housing Council. “Absent stepped-up basis, heirs could inherit an apartment property with a small amount basis and possibly sizeable debt. If they are taxed immediately, the resulting depreciation recapture and capital gains taxes could exceed their ability to pay without selling the asset. Even if funds to pay tax are available, heirs may have little left over to invest in and maintain the property, which could negatively impact the available affordable housing stock.”
Under current law, when a home, small business, or farm is passed on to the next generation, our tax code allows for stepped-up basis, ensuring the inheritor is only responsible for the increased value of an asset from the time they acquired it and not for gains which benefited a previous generation. The tax code also recognizes the only appropriate time to tax capital gains is upon the sale of an asset, as any effort to tax unrealized gains would necessitate the sale of assets which would otherwise continue to be utilized to create jobs and economic opportunity.
