President Biden proposes tax changes

Apr 30, 2021  | 3 min  | Ep4637

This week, President Biden delivered his first speech to a joint session of Congress. 

He’s calling for an increase in taxes on the richest one percent and has other changes in mind. 

Peter Tubbs reports. 

President Joe Biden: “But it's time for corporate America and the wealthiest one percent of Americans to just begin to pay their fair share, just their fair share."
In a joint address to Congress Wednesday, President Biden proposed sweeping changes to the Federal tax code, including provisions that would affect the heirs of farmers and ranchers. 
The White House proposed a reversal of the 2017 tax bill, and reforms that seek higher tax payments from America’s wealthiest households. An increase in the highest tax rate in earned income would be joined with a change in the way estates are valued. The President’s plan would eliminate the practice of “stepping up” the basis for gains in assets in excess of $1 million dollars, but would also defer estate taxes on farm, ranch or small business assets as long as the farm or business remains family owned. 
The step-up valuation has long been common in the inheritance process, and has allowed generations of farm families to avoid paying capital gains taxes on inherited land. 
The lowering of step-up allowances is an attempt by Democrats and the White House to target inherited wealth in the form of stocks, bonds, and other non-business related assets. A carve out provision for business and agricultural assets is an attempt to encourage investment in family owned businesses and farms without fears that financial growth will be taxed during the inheritance process. 
Roughly one-third of American farms operate over 90 percent of farmland, and the size of some farms could trigger tax issues under the new thresholds. The USDA released a rough outline of the proposed tax reform shortly before the President’s speech, where it estimates that less than 2 percent of farms would owe taxes on inheritance, but only on non-farm assets. 
The American Farm Bureau argues that maintaining step-up calculations in inheritance land transfers keeps the marketplace for land liquid. Reducing the step-up allowance could discourage land sales in some situations, which might inflate land prices due to decreased supply. 
The President’s speech was written in broad strokes, and details of the proposed tax changes have yet to be presented. 
President Joe Biden "My fellow Americans, trickle down, trickle down economics has never worked. And it's this time to grow the economy from the bottom and the middle out."
For Market to Market, I’m Peter Tubbs

 

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