NCBA NEWS
CONTINUING THE FIGHT FOR SOUND TAX POLICY With more than 40 percent of farmland expected to transition in the next two decades, Congress must prioritize policies that support land transfers to the next generation of farmers and ranchers. When doing this, it is imperative that lawmakers take into consideration the complexity of family-owned businesses and the implications changes to federal tax policy would have on them long-term. Helping lawmakers understand the complexity of family-owned agricultural businesses, specifically farms and ranches, is a top-priority for NCBA’s Government Affairs team. In April, President Biden announced his American Families Plan. Through this plan, Biden proposed changes to several provisions of the tax code to raise approximately $1.5 trillion in revenue over the next 10 years. Long-standing tax provisions being threatened include stepped-up basis and like-kind exchanges – both critical tools that farmers and ranchers utilize when planning for generational transfer. After Biden announced his plan, there was legislation introduced by members of Congress that, again, called for the elimination of steppedup basis, a decrease in the estate tax (Death Tax) exclusion limits, and an increase in the death tax rates. The proposals are misguided and would be disastrous for family-owned businesses in rural America. From the beginning, NCBA has said that a budget cannot be balanced on the backs of farmers and ranchers. We, along with members of Congress and trade groups representing rural America, have led efforts to oppose changes to federal tax policy that would adversely affect family-owned businesses. NCBA has been at the forefront of 14 | Ohio Cattleman | Late Fall Issue 2021
many of these efforts. While we have been aggressive in our efforts since these misguided proposals were announced, fighting for sound tax policy for America’s cattle producers is something that NCBA has been doing long before these proposals. The Government Affairs team in D.C. has worked for years to build relationships on Capitol Hill with members of Congress and their staffers, so NCBA is seen as a trusted partner in the industry and a reliable source for information. In addition, the team has worked quickly to build relationships with the Biden administration. We understand the importance of having an open dialogue with the administration and have been part of numerous conversations with Biden’s team regarding the needs of cattle and beef producers in regard to sound tax policy.
NCBA-Backed Research
NCBA is on the steering committee of the Family Business Estate Tax Coalition (FBETC) – a coalition comprised of associations representing rural Americans and family-owned businesses. Last summer, we began to have conversations regarding the need for research about the importance of stepped-up basis for family-owned businesses. As a result of that, last spring, FBETC released an EY study quantifying the impact a repeal of stepped-up basis would have on family businesses. The study proved what NCBA had been saying for a long time — family-owned businesses and the local economies they support would be hit hardest by a repeal. The data from this study has been a critical tool in NCBA’s efforts to educate lawmakers on how repeal would adversely
affect a vast number of their constituents. In addition, NCBA has excellent relationships with both the House and Senate Agriculture Committee. After the Biden administration claimed that a majority of family farms would not be affected by the changes to long-standing tax provisions, NCBA knew that simply was not true and had extensive conversations with committee staffers regarding the need to combat that misinformation. Ultimately, Ranking Member of the Senate Agriculture Committee John Boozman and Ranking Member of the House Agriculture Committee GT Thompson requested a study through TexasA&M that proves the negative impact of transfer taxes on family-owned businesses. The study found that if stepped-up basis were to be eliminated and the estate tax exemption was decreased (to $3.5 million per individual and $7 million per couple), 98 percent of the representative farms used in the study would have seen an average tax increase of $1.4 million. This information has been critical in the education efforts our team has been a part of.
Legislation Introduced to Protect Farms and Ranches
In March, NCBA worked closely with Sen. John Thune (R-SD) and Reps. Sanford Bishop (D-GA) and Jason Smith (R-MO) to secure introduction of The Death Tax Repeal Act of 2021. This bicameral legislation held members of Congress accountable to maintain a public record of support for full, permanent repeal of the Death Tax. NCBA also secured reintroduction of the Preserving Family Farms Act. This bipartisan legislation, introduced
