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AFPC study: Proposed estate tax bills would harm farm families

by Georgia Farm Bureau

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A new study from the Agricultural & Food Policy Center (AFPC) at Texas A&M shows sproposed changes to taxes on inherited property will have a devastating impact on the next generation of family farmers and ranchers.

At the request of Republican leaders on the House and Senate Agriculture Committees, AFPC analyzed two bills introduced in the Senate that would change the tax liabilities of family members when farm and ranch estates are passed from generation to generation. 

AFPC found that if enacted, the two bills analyzed—the Sensible Taxation and Equity Promotion (STEP) Act, which proposes to eliminate stepped-up basis upon death of the owner and the For the 99.5 Percent Act, which would decrease the estate tax exemption—would have a devastating impact on the hardworking families that own and operate farms and ranches.

AFPC maintains a database of 94 representative farms in 30 states, which allows AFPC to analyze policy changes on farms and ranches across the country. In this study, published on June 15, AFPC analyzed the tax results of five different farm estate scenarios: Current Tax Law with No Generational Transfer; Generational Transfer under Current Tax Law/Generational Transfer under STEP Act.; Generational Transfer under the For the 99.5% Act and Generational Transfer under both the STEP Act and the For the 99.5% Act.

The STEP Act’s proposed changes to stepped-up basis mirror proposals discussed by the Biden administration. If it were to be implemented, 92 of AFPC’s 94 representative farms would be impacted with an average additional tax liability of more than $720,000 per farm. Together, the two bills would raise taxes an average of $1.4 million on 98 percent of AFPC’s representative farms.

AFPC’s study is available online here.

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