Republican House and Senate Ag Committee leaders Tuesday unveiled a study detailing negative impacts that proposed changes to capital gains and estate taxes could have on intergenerational farm transfers, though the report does not consider potential exemptions the Biden administration has insisted would insulate farmers from some of the shifts.
Economists from the Agricultural and Food Policy Center (AFPC) at Texas A&M University modelled effects the Sensible Taxation and Equity Promotion (STEP) Act -- which would eliminate stepped-up basis for capital gains taxes -- and the 99.5 Percent Act -- which would lower the estate tax exemption to $1 million per individual -- would have on a set of 94 "representative farms" included in a database maintained by AFPC. The policy center simulated how the two bills, either in isolation or together, would have based on asset information furnished in a survey of operators included in the AFPC database.
If both tax measures were enacted, AFPC's analysis found 92 of 94 (98%) of the representative farms would see higher taxes, with an average liability of $1,431,408.