The democratic proposal in Washington to overhaul farm inheritance taxes is seemingly on pause right now. However, WCIA 3’s Stu Ellis spoke with a central Illinois congressman who said it could rear its head at any time.
Congressman Darren LaHood earlier this week visited the Logan County farm of Ron Kindred, and said members of Congress from rural areas on both sides of the aisle resisted changing the proposal to eliminate the step up in basis at the time of a farm inheritance.
“Stepped up basis and the changing of that was proposed by the Biden administration and there was a lot of pushback,” said LaHood. “I listened to Ron and a lot of other farmers. That would drastically change how family farms are passed down. Taxes that would have been paid wit that would have been exorbitant. People would not have been able to survive. They would have had to sell off their farmland. We couldn’t let that happen, so we pushed back. The Biden administration thankfully took that out. But it’s a wake-up call that in the future, this could come back. And we’ve got to make sure we are vigilant. And we let people know how devastating this would be to family farms.”
And is 1031 still in the formula for tax opportunities? “It is,” said LaHood. “The Democrats in their proposal of the social infrastructure bill want to change how you do the 1031 like-kind exchanges, again, it is very important to understand how family farmers use that when they buy a piece of land or sell a piece of land and get another one. Again, we have to be careful about the collateral damage that is done to family farmers because of that. A lot of my colleagues in Washington, D.C. know nothing about agriculture, think all farmers are rich and they are wealthy because of the price of land, but what they don’t realize is the investment that gets put into these combines and all the equipment that is on this property here. How much money they are in debt on it. I’ve tried to take that message back, tried to educate my colleagues on that; the devastating effect that the changes to 1031 and the stepped up basis, how that would affect our farmers.”
Congressman LaHood is a member of the House Ways & Means Committee that has the responsibility of changing tax laws.