Fox News published an opinion piece by Sen. John Thune (R-SD) on August 8 that details one of many destructive aspects of President Joe Biden’s infrastructure plan that get little or no coverage by the corporate media. If implemented, one of the fundamental tax changes included in Biden’s plan will crush family farms and small businesses throughout the country.
Sen. Thune points out the critical role American farmers played in keeping the country going through the worst parts of the COVID-19 pandemic. Without fanfare or public acknowledgment, and despite supply chain interruptions and slowdowns, food supplies were maintained due to the never-ending work of food producers.
The multi-trillion-dollar spending package that Biden is proposing includes tax increases on family businesses and farms.
For many decades, the federal tax code has allowed family-owned businesses to be transferred from one generation to the next without charging capital gains taxes on the value built up through the life of a business.
The theory has always been that capital gains are not recognized when family members inherit business assets when an older family member passes away. No money has been recognized as would be the case in a sale of support, and therefore no gain to collect taxes. Allowing tax bases to “step up” on death also will enable businesses to avoid crippling taxes when an owner dies.
Biden’s plan calls for a realization of capital gains upon transfer at the time of death or a lifetime gift. Some exclusions and exceptions are provided, but the general rule of recognition at the original tax basis will apply to all bequests or donations. The new rules will also offer that assets transferred into a trust will be subject to capital gains recognition and taxation.
According to the Texas A&M Agricultural and Food Policy Center, it was found that for the 30 states it included in a study, the average increase in taxes owed on inheritance exceeds $726,000.
In addition, all of these capital gains tax increases will be on top of existing estate taxes. The apparent impact of these new taxes will mean that many family farms and businesses will have to be sold just to pay the taxes immediately due.
Small family farms and companies will increasingly become the property of mega-corporations and industrial farms, which already reap enormous benefits from crony capitalism and corporate support, disincentivizing people from beginning businesses or entering agricultural production.
Sen. Thune calls the new plan the “double death tax,” All Americans should pay attention to which Republicans support the Democrats’ plan to destroy American small businesses further.