Concerns Persist Over Capital Gains and Stepped-up Basis Plans

In an analysis last month by the American Farm Bureau Federation and American Soybean Association, they highlighted that the average value of farm ground has increased 223% since 1997. In some northern Midwest states, the value increase averages more than 300%. These higher land values would have a major impact on basis and capital-gains taxes.

On Tuesday, eight Republicans on the Senate Agriculture Committee wrote a letter to Agriculture Secretary Tom Vilsack, asking the secretary “to make public a detailed explanation and any supporting economic analyses that clarifies how the Biden administration’s tax increases will affect farm estates.”

The letter asks Vilsack to explain how USDA arrived at the conclusion that 98% of farm estates will not be affected by the proposed tax changes. “The proposed tax impacts are dependent on a number of factors, including but not limited to appreciation in farmland assets prior to a property owner’s death, size of the farm operation and associated assets, income of the heirs, and the farm’s ownership structure. Given these factors, we are writing to seek a detailed explanation and supporting economic analysis clarifying how these tax provisions will affect farm estates, including specifically how USDA arrived at the conclusion that fewer than 2% of farm estates will be impacted by the proposed tax changes,” the senators wrote.

Republicans on the committee have made this a frequent talking point with multiple senators during a forestry hearing last week asking witnesses about how they would see the capital gains and stepped-up basis affecting their woodlands. Sen. John Boozman, R-Ark., ranking member of the Agriculture Committee, said at the hearing he is concerned about the Biden administration’s “tax proposal on capital gains and stepped-up basis, which may have significant implications for the agriculture and forestry industries by frustrating, rather than facilitating, market opportunities for land owners, timber harvests and the wood product industries.”

Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., speaking to reporters after last week’s hearing, noted that there is a lot of support from Democrats to keep the elimination of stepped up basis from affecting farmers and family-owned businesses. Stabenow added, “Everyone should be paying their fair share” in taxes and that includes “wealthy people and corporations” that use the roads.

DTN Political Correspondent Jerry Hagstrom contributed to this report.

Chris Clayton can be reached at

Follow him on Twitter @ChrisClaytoDTN

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