As Americans struggle with historic inflation in food prices and farmers continue to see record-high input costs, U.S. Sen. John Boozman expresses his concern for potential incoming tax increases for agriculture.
Boozman, a Republican senator from Arkansas, has served on the U.S. Senate since 2011 and is a ranking member of the Senate Committee on Agriculture, Nutrition, and Forestry. In a news release today, Boozman stated that the nomination of Jared Bernstein — former Chief Economist to Biden under the Obama Administration — to serve as chair of the White House Council of Economic Advisors is a “threat to rural America’s future.”
Boozman has since encouraged Senate Committee on Banking, Housing, and Urban Affairs members to reject his nomination.
“The administration’s attempts to pay for its priorities by increasing taxes on family farmers has been roundly rejected. The farm community rightly said ‘no’ to the president’s proposals to eliminate stepped-up basis, raise the death tax, limit like-kind exchanges, and increase capital gains taxes.”
But, now Boozman is concerned that Bernstein’s support for a “reckless” tax and spending agenda could be pushed further as the head of the CEA. Among these agendas, Bernstein has recommended raising revenue on both the individual and business side of the tax code by raising high-end tax rates and estate taxes and ending a “step-up basis.”
To minimize the impact of burdensome capital gains taxes, farmers and ranchers use a stepped-up basis, which provides a reset for the asset value basis during intergenerational transfers. The magnitude of the tax burden that would be felt if the basis alone is taken away or reduced would likely significantly exceed the annual income generated by the assets — a concern that’s specifically piqued farmer interest in the past.
Tax policies that increase taxes on capital gains or inheritance could make it more difficult for families to pass down farms to the next generation. Many farms are family-owned and operated, and families may rely on the transfer of assets from one generation to the next to maintain their operations. Changes to the tax code that make transferring assets more difficult or expensive could be problematic for these families.
Another potential concern is that tax policies that increase corporations’ taxes could indirectly impact agriculture by increasing the cost of inputs like fertilizer, seed, and machinery. Many of the companies that produce these inputs are large corporations that could be subject to higher taxes under certain policy proposals. If these companies pass on the costs of higher taxes to farmers, it could increase the cost of production and make it more difficult for farmers to compete in the marketplace.
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