Attention Turns To Protecting Farmers and Ranchers From Taxes
While there is still plenty to be concerned about when it comes to the on-going activities of the Nevada Legislature, we’re shifting attention here to the need for contacts with members of the Nevada delegation in Washington, D.C.
Congress is back in the mindset that government should acquire more tax dollars from taxpayers and one of the targeted sources is eliminating the step-up in basis for capital gains taxes. Farm and ranch families hold assets in their enterprises over long periods of time, such as land, which are passed from generation to generation. Putting a bullseye on the stepped-up basis could be devastating for farm and ranch families.
The stepped-up basis is a process which allows individuals to pay capital gains taxes only on a property’s increase in value since the time that land was inherited, instead of paying the full increase in value since it was purchased by a deceased relative. In addition, the tax on the new stepped-up value is deferred until property is sold by the surviving family member.
Because of several new legislative proposals that would eliminate the step-up in basis for capital gains taxes, attention is being given by the American Farm Bureau Federation (AFBF) and other business advocates to urge Congress for support of the stepped-up basis.
Bills have been proposed in the U.S. Senate and the U.S. House to eliminate stepped-up basis and impose capital gains taxes at death with a $1 million exemption. The Senate version of this bill has been labeled as the “Sensible Taxation and Equity Promotion (STEP) Act. It is proposed by a group of Senators (Senator Chris Van Hollen of Maryland, Senator Cory Booker of New Jersey, Senator Bernie Sanders of Vermont, Senator Sheldon Whitehouse of Rhode Island and Senator Elizabeth Warren of Massachusetts). The House Bill, HR 2286, was introduced by Congressman Bill Pascrell of New Jersey.
Under the proposals for the repeal of the Step-up:
Capital gains taxes would be collected at death. The new tax would be collected on top of existing estate taxes with the top capital gains tax rate set at 20 percent and the maximum estate tax rate levied at 40 percent. Assuming deductions are allowed that would mean a 52 percent tax rate at death.
The impacts on family-owned businesses, like farms and ranches, include liquidity impacts, increased compliance costs and disputes with the Internal Revenue Service and burdens-on-burdens in regard to estate taxes. As we pointed out earlier…the proposed changes to these taxes would be devastating to America’s family-owned farms and ranches!
Studies by AFBF Economists have found that the massive tax burdens on the agricultural sector would likely exceed the annual income generated by the assets for many years to come.
Farm Bureau members are pulling out all the plugs to send emails to members of the U.S. Senate and their specific House member. Their message has been a unified voice that “now is not the time to impose new taxes that could put families out of business!”
This useful website portal: fb.org/advocacy/action-alerts/protect-stepped-up-basis-for-american-family-farms/ allows participants to send their emails forward to those representing them in Washington, D.C.
You can also go directly to the websites of each of the members of the Senate or House and use their “Contact” system to communicate your views.
There’s also a bill to support:
In addition to voicing strong opposition to the changes being considered to negatively impact family-owned farms and ranches through the bills being considered on elimination of stepped-up basis, there is also a bipartisan bill that you can encourage Nevada’s members of the House to support.
H.R. 2370 is called “the Preserving Family Farms Act of 2021.” It is sponsored by Representative Jimmy Panetta of California and Jackie Walorski of Indiana. It modernizes the special use valuation provision of the tax code (IRS Code 2032A – Special Use Valuation) and allows property to be appraised as farmland rather than at development value when determining estate taxes at the time of sale.
Farm and ranch families who choose to use Section 2032A – Special Use Valuation, commit to continuing to operate their farm or ranch as farming/ranching operations for 10 years. If they stop farming or ranching, sell the farm or ranch outside of the family, or change the use of their property – they must repay the forgiven estate taxes. Based on AFBF’s fact sheet on this subject, it is also noted that certain activities trigger an estate tax recapture – (such as harvesting timber or selling a conservation easement).
The “Preserving Family Farms Act of 2021” could be a very positive step in making the provisions of Section 2032A – Special Use Valuation, a more workable tool for a wider range of family-owned farms and ranches.
Farm Bureau is also pushing to make the current $11.7 million estate tax exemption to be made permanent and indexed for inflation. Ultimately ending the Death Tax forever would be the goal to achieve, but until that time, making the current exemption last – with indexing – is the next best thing.
By Doug Busselman | NFB, Executive Vice President
Fusion
Every other year the American Farm Bureau Federation (AFBF) holds the Fusion conference to bring together volunteer leaders from Young Farmers and Ranchers (YF&R), Women’s Leadership and Promotion and Education committees.
Unfortunately like many other things the event had to be turned into a virtual convention. On the upside many people who might not of had the opportunity to travel to the in-person convention now had the opportunity to participate in the free virtual event.
To keep the virtual Fusion conference as engaging as possible attendees had a wide variety of things to participate in from virtual farm tours from across the country, YF&R Collegiate Discussion Meet, breakout sessions and evening entertainment. A big part of the Fusion conference is the networking that takes places so this year attendees were able to mingle with others through chat sessions and different networking events.
Breakout sessions are a big part AFBF events, and the Fusion Conference had a variety of hot topics of interest including the agriculture outlook for 2021, rural mental health, advocating for agriculture though social media and smart technology just to name a few. A big benefit of the virtual convention is being able to go back and watch other breakout sessions when time allowed, or if another breakout session was playing at the same time as another you were interested in.
Nevada YF&R and Women’s Leadership Committee both participated in the virtual convention. Kari Brough the Nevada YF&R Chair said, “I missed seeing and being able to meet with friends and collogues face to face but still enjoyed my time with the online Fusion Conference. I enjoyed being able to listen while working and catching them at times that worked with my schedule. I was reminded of the reason why I joined the Farm Bureau and look forward to implementing new ideas to this year’s plan of work.”
One of the many benefits of these conferences is the ideas you get from the different breakout sessions and idea sharing conversations. Each state is so different in how the operate, but they all share the common goal of getting people engaged and interested in the Farm Bureau family.
It was great to be able to connect in some way with others, but nothing compares to the true in-person conventions. Nevada YF&R and Women’s Leadership committee look forward to the next Fusion conference and hope to be able to meet with everyone again.
By Brittney Money, Director of Communications
Nevada Heritage Foundation Scholarship
We are excited to announce the Nevada Heritage Foundation scholarship is now open!
This scholarship award is available to students currently enrolled in either a traditional or non-traditional post-secondary program. Preference will be given to students pursuing career goals in the Agricultural or Ag-Business industry.
The successful candidate must be from a Farm Bureau member family and an interview may be required of the top individuals before the recipient is selected. Two scholarships may be awarded in the amount of $2000.00 and $1000.00.
The full application can be found on the Nevada Farm Bureau website at nvfb.org. Applications must be submitted by July 1, 2021. If you have any additional questions, please contact the NFB office at 775-674-4000, or email Julie Wolf at wolfranch1nv@gmail.com
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Nevada Farm Bureau Testifies For Amendment On Cage-Free Eggs
Nevada Farm Bureau was granted the limited ability to enter the Legislative Building on April 27 and was able to testify in person before the Senate Health and Human Services Committee when they held a hearing on Amended AB 399. This bill is the “cage-free” egg bill that passed the Nevada Assembly.
leg.state.nv.us/Session/81st2021/Bills/Amendments/A_AB399_343.pdf
Nevada Farm Bureau has been opposing the bill, but has been working to get a carve-out to protect Nevada’s backyard and small farm flock of hens and egg production. The amendment that we have been working on was brought before the Senate Committee and Farm Bureau’s testimony said that adoption of the amendment would cause Farm Bureau to move to a neutral position on the bill. This amendment will provide a 3,000 hen exemption from being required to be certified.
Push Continues To Address The Economic Consequences Of Removing Stepped-Up Basis
Efforts by the American Farm Bureau Federation (AFBF) to activate Farm Bureau members in making critical connection with their members of Congress seems to be having some effect…the response from Farm Bureau members using the Farm Bureau Action Request platform to send emails to members of Congress has been setting all-time records. Hopefully, if you haven’t participated in this Action Request (www.fb.org/advocacy/action-alerts/) you will make the time to click and let our elected representatives know of how important the matter is.
A recent article (fb.org/newsroom/study-shows-repealing-stepped-up-basis-would-damage-the-economy) puts into context the ramifications for the proposal to erase the considerations for the Stepped-Up Basis. AFBF President Zippy Duvall also weighed in with his perspective on the impact this significant tax increase will have on family farms and ranches. Read his thoughts here: fb.org/viewpoints/family-farm-legacy-threatened-by-proposed-tax-increase