Alton Comments
  Receiving Schedule
  Contact Us
  Cash Grain Bids
  Discount Schedules
  USDA Reports
  NDAWN Network
  Futures Markets
  Market News
  Markets Page
  Headline News
  DTN Ag Headlines
  DTN Renewable Fuels
- DTN Headline News
Texas A&M: Ag Hit Hard by Tax Changes
By Todd Neeley
Tuesday, June 15, 2021 3:30PM CDT

LINCOLN, Neb. (DTN) -- The number of farms and ranches paying more in taxes would be dramatically higher if proposed tax code changes affecting agriculture become reality, a new study from Texas A&M's Agricultural and Food Policy Center found.

Proposed changes to stepped-up basis and other tax provisions from the Biden administration and Democratic members of Congress have raised alarm bells on farms and ranches.

Two bills including the "Sensible Taxation and Equity Promotion Act" would eliminate stepped-up basis upon death of the farm or ranch owner and the "For the 99.5 Percent Act" would decrease the estate tax exemption.

The Texas A&M study conducted by Joe Outlaw, co-director of the Agriculture Food Policy Center, found larger farm operations in particular would face significant tax challenges. The center maintains a database of 94 farms in 30 states.

"Under current tax law, only two of the 94 representative farms would be impacted by an event triggering a generational transfer," the study found.

"By contrast, under the STEP Act, 92 of the 94 representative farms would be impacted, with additional tax liabilities incurred, averaging $726,104 per farm. Under the 99.5% Act, 41 of the 92 representative farms would be impacted, with additional tax liabilities incurred, averaging $2.17 million per farm.

"If both the STEP Act and the 99.5% Act were simultaneously implemented, 92 of the 94 representative farms would be impacted, with additional tax liabilities incurred, averaging $1.43 million per farm across the 92 representative farms."

Under current law, when the owner of a farm or ranch dies, the estate is subjected to federal estate taxes.

The study said as of 2021, $11.7 million per individual and $23.4 million per couple in assets are exempted from the estate tax, "effectively protecting most farms from the estate tax."

Outlaw said based on the email responses he received from farmers and ranchers surveyed, many of them are concerned. Usually when A&M reaches out to those producers on various issues about 10% to 15% of them reply.

"We sent this email, within one week we had 40% responses or 247 producers sat down and filled out and told us, 'this is how this was an impact and that it would be devastating," Outlaw said during a news conference Tuesday.

When a decedent passes farm assets to an heir, the heir is allowed to take fair-market values as their basis in the property (or stepped-up basis). That allows heirs to effectively avoid capital gains taxes.

Given that cropland values have roughly tripled during the past 25 years, most producers are sensitive to any changes to the estate tax exemptions or stepped-up basis.

According to USDA, the average farm size in the United States in 2019 was 444 acres. The representative farms and ranches in the study are all "assumed to be full-time, commercial-scale family operations," the study said.

"The results of this analysis will vary greatly by farm, depending upon each farm's asset base and the share of their farmland they own versus rent."

Rep. Glenn Thompson, R-Pa., ranking member on the House Committee on Agriculture, said during a news conference on Tuesday the proposed tax changes would make it more difficult for future generations to farm.

"For farmers and ranchers these new tax levies are not just an annoyance," he said. "They don't mean that a farmer will have to forego a new truck for a year, they mean an heir might have to sell off a significant chunk of the family farm or quite frankly, lose it all together."

The Biden administration has proposed creating tax carve outs that it says will protect farmers and ranchers.

"But the details of this report illustrate just how complex farming operations can be, how they can vary across regions and commodities," Thompson said.

"The idea that there's one-size-fits-all exemptions will hold all family farms completely harmless is naive at best and disingenuous at worse."

Read more here:

"Scott Raises Concerns Over Stepped-up Basis, Winning Praise From Corn Growers" https://www.dtnpf.com/…

Read the study here: https://republicans-agriculture.house.gov/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

blog iconDTN Blogs & Forums
Technically Speaking
Editorial Staff
Monday, June 14, 2021 8:13AM CDT
Monday, June 7, 2021 9:37AM CDT
Tuesday, June 1, 2021 8:40AM CDT
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Friday, June 11, 2021 8:00AM CDT
Wednesday, June 9, 2021 10:58AM CDT
Friday, June 4, 2021 8:05AM CDT
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Tuesday, June 15, 2021 8:12PM CDT
Monday, June 14, 2021 8:35PM CDT
Friday, June 11, 2021 5:12PM CDT
Minding Ag's Business
Katie Behlinger
Farm Business Editor
Wednesday, June 9, 2021 4:45PM CDT
Monday, June 7, 2021 12:07PM CDT
Friday, June 4, 2021 8:59AM CDT
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Tuesday, June 15, 2021 11:43AM CDT
Tuesday, June 15, 2021 11:43AM CDT
Saturday, June 12, 2021 6:10AM CDT
DTN Production Blog
Pam Smith
Crops Technology Editor
Wednesday, June 16, 2021 5:46PM CDT
Tuesday, June 8, 2021 4:12PM CDT
Tuesday, June 8, 2021 4:12PM CDT
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Monday, June 14, 2021 3:07PM CDT
Monday, June 7, 2021 5:26PM CDT
Monday, May 24, 2021 3:40PM CDT
South America Calling
Editorial Staff
Thursday, June 17, 2021 12:35PM CDT
Thursday, June 10, 2021 1:30PM CDT
Thursday, June 10, 2021 1:30PM CDT
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Thursday, June 10, 2021 12:40PM CDT
Tuesday, June 1, 2021 8:03AM CDT
Friday, May 21, 2021 11:01AM CDT
Machinery Chatter
Dan Miller
Progressive Farmer Senior Editor
Friday, June 11, 2021 6:40PM CDT
Tuesday, June 8, 2021 5:10AM CDT
Friday, June 4, 2021 4:15PM CDT
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Thursday, June 17, 2021 3:58PM CDT
Wednesday, June 16, 2021 3:22PM CDT
Wednesday, June 16, 2021 3:22PM CDT
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Wednesday, June 16, 2021 2:08PM CDT
Monday, June 7, 2021 4:57PM CDT
Monday, April 26, 2021 2:24PM CDT
Copyright DTN. All rights reserved. Disclaimer.
Comments on this web site are for information only. User should not use any generic comments for personal purposes. Trading of futures and options can be risky.
Powered By DTN