Biden administration hit with conflict of interest allegations
Former Special Assistant to George W. Bush Brad Blakeman reacts to allegations Biden is touting an electric vehicle company his energy secretary owns stock options in.
President Biden has said his tax proposals would make big business and wealthy investors pay their fair share.
His package would also likely deliver a blow to American farm owners by limiting a longstanding tax break. The provision allows landowners to defer paying capital-gains tax when they sell investment property and put the proceeds toward the purchase of other real estate.
Farmers for generations have used the tax break to cheaply and quickly relocate farm operations to lands with better soil, diversify the crops they grow and consolidate land holdings. Some have used it when exiting the farming business at retirement. Farm owners in 2012 held 915 million acres, about 40% of the land in the continental U.S.
Farmers were hit four years ago when the Trump administration narrowed the use of this tax deferment, known as a 1031 like-kind exchange. The provision, named for a section of the tax code, used to apply to many types of personal property, including farm equipment and livestock. Farmers exchanged their old tractors and upgraded to newer and better ones without having to pay tax on their trade-ins.
BIDEN INSISTS RICH AMERICANS WILL STILL HAVE "TWO HOMES AND THEIR JETS' DESPITE TAX HIKE
The 2017 tax law under President Trump eliminated 1031 exchanges for everything but real estate.
"That has been a very hard change," said Kalena Bruce, a fifth-generation cattle rancher near Stockton, Mo., where she and her husband oversee a 300- acre ranch. "We still have to make improvements to our herd, still have to make improvements to our machines."
Farmers and land brokers said the latest proposal, capping the profits from land sales that can be tax-deferred at $500,000, would add another burden on farming.
Mr. Biden’s proposal would also raise the top capital-gains tax rate that land sellers would have to pay to 43.4% from 23.8%. It would impose capital-gains taxes at death on appreciated asset gains, a change farmers worry will make it difficult to keep land in the family. However, the Agriculture Department has said the plan would exempt farmers from those taxes at death, if the farm remains both owned and operated by family members.
Kristine Tidgren, director of the Center for Agricultural Law and Taxation at Iowa State University, said tax exceptions such as 1031 have allowed farmers, who often endure long periods without income between harvests, to retain as much cash on hand as possible for their operations. "Farming is very cash-poor," she said. "Without a lot of these tools, you wouldn’t really be able to function in that sort of environment."