Minnesota Farmers Union voices support for stepped-up basis
Sept. 20, 2021
ST. PAUL – The latest version of the tax package moving through Congress protects stepped-up basis. The tax package is expected to generate $2.1 trillion over 10 years and makes multiple changes to estate-tax exemptions and rates.
Minnesota Farmers Union (MFU) is among the organizations that have called on lawmakers to protect the stepped-up basis exemption for family farmers.
“Stepped-up basis is an important tool that helps many farm families pass land on to the next generation,” said MFU President Gary Wertish. “If the stepped-up basis is reduced or eliminated, it will make it harder for beginning family farmers and ranchers to cash flow their farms and ranches.”
The term “stepped-up basis” refers to the adjustment of an asset’s value upon death of its owner and passage to an heir. An asset, such as land, is typically worth more when the owner dies than when it was acquired. The higher market value of the asset at the time of inheritance is used for tax purposes and the step up in basis typically minimizes capital gains taxes for the heir.
“Our members support changing the tax system so that the wealthy pay what’s fair,” Wertish said. “When you hear about people like Amazon CEO Jeff Bezos or Tesla CEO Elon Musk paying nothing in federal income taxes, you know our federal tax system needs some changes. If we’re going to have a rural economy that works for everyone, those changes can’t come on the backs of family farmers. We encourage lawmakers to reach out to their constituents to learn more about how the stepped-up basis is used in agriculture and what reforms will make it an even better tool to keep farms in the family as well as bring beginning farmers into agriculture.”
National Farmers Union (NFU) also weighed in, sending a letter to congressional leaders reiterating and restating their concerns with the elimination of the “stepped-up basis” at death.
“Burdensome new tax liabilities may lead to the premature sale of family farms and ranches and contribute to a worrying trend toward greater farmland consolidation and corporate control of our food system,” said Rob Larew, NFU president.
As NFU states in their letter, “taxing capital gains on investment income is different from taxing assets, such as land, that are integral to running a farm or other small business.”
About Minnesota Farmers Union
Minnesota Farmers Union works to protect and enhance the economic interests and quality of life of family farmers and ranchers and rural communities. MFU is a nonprofit membership-based organization. Membership is open to everyone. Learn more and join at www.mfu.org, and follow MFU on Facebook, Twitter and Instagram.
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Minnesota Farmers Union—Standing for Agriculture, Working for Farmers (www.mfu.org)