Missouri Officials Struggle Against Federal “Death Tax”
Missouri officials gathered in the Missouri Agricultural Office Building at the state fair last week to discuss agricultural issues, covering everything from meat packaging industry To rural broadband. One of the topics warned by speakers that could have drastic impacts on Missouri farmers in the future was the reforms of what is commonly referred to as the “death tax. “
The conversation has resumed across the country as lawmakers on Capitol Hill consider changes to the country’s budget and tax code, with farm groups and lawmakers opposing the proposals. Here’s a look at the controversial tax, from what it is to what could come next.
What is the death tax?
The federal “reinforced base“The rule sees the government adjusting the valued values of a house or a portfolio of stocks when they are passed on to the next generation as an inheritance. The rule protects heirs of property below a threshold. $ 11.7 million to pay what is commonly referred to in agricultural circles as the “death tax” property transfer tax after someone dies.
The federal government estimated that around $ 40 billion was kept in the pockets of heirs in 2020 under the rule.
President Joe Biden proposed the elimination of the rule earlier this year, seeking to direct those funds towards its $ 1.8 trillion American Family Plan which aims to increase federal spending on health care, community colleges and daycares.
“Is it more important to keep these tax loopholes for millionaires – who are good people; they’re not bad people – or would we rather put $ 7,200 in the pockets of working moms and dads every year if they have two kids, ”Biden said in remarks earlier this year.
“It’s not an inheritance tax,” Biden said. “It was a tax [that] was due two seconds earlier. But that is what “reinforced base” means. It is [when] a person dies and leaves the stock… to his or her son or daughter; the son or daughter will have nothing to pay on this multi-million dollar gain when he sells those shares. And it’s worth a lot of money.
A study carried out on behalf of American Federation of Agricultural Offices (AFBF) found that the changes would reduce the country’s GDP by $ 100 billion over the next decade. A separate analysis found the change would increase taxes by an average of $ 498 per acre in Missouri for family-owned farms since 1997, while families with longer ownership histories are expected to see larger impacts.
Additionally, Biden proposed an increase in capital gains tax, which is paid when an asset is sold that has increased in value. The administration has suggested a maximum federal rate of nearly 40 percent on long-term earnings, a 10 percent jump from current rates.
What’s going on in Congress?
Much of the Missouri GOP congressional delegation presented a united front to oppose change, with Republican leader of the US House Budget Committee Jason Smith in the foreground. Smith co-sponsored the Death Tax Repeal Act this year, seeking to eliminate the controversial tax. The measure has 147 co-sponsors from both parties, including Missouri Congressman Billy Long, Blaine Luetkemeyer, Sam Graves, and Congressman Ann Wagner and Vicky Hartzler.
“The fight we have right now is, I think, the most important fight I have ever seen in public service,” Smith said at a press conference last week. “Raise the capital gains tax and what they want to do with the death tax – every time your family member dies, guess who inherits 61%?” The federal government. “
“I think this is the most criminal tax we have,” Hartzler said. “If that happens, there will be no more possibility of passing on the family farm. It would be the death of our rural communities, and we cannot allow that to happen. “
The US Senate version also had the support of Senators Roy Blunt and Josh Hawley. Both versions were referred to committees in March.
“So many of the people where I work are so out of touch with farms and agricultural America that they think if you have a farm that’s over 40 or 50 acres, you’re no longer a family farmer, you’re kind of a big farm business, ”Blunt said. “We all know that’s not fair. We are in a big fight here.
How is the Missouri Farm Bureau responding?
Missouri Farm Bureau President Garrett Hawkins sent a letter to the president in May, opposing the resulting tax increase for farm families and arguing that eliminating the high base rule would cause immense economic damage to farmers who hope to pass on their operations.
“As a farmer myself, I always look to the future and prepare to pass the farm on to the next generation. This planning is compromised when federal tax codes are changed by people thousands of miles away who don’t understand the impact on farmers, ”Hawkins told the Missouri Times. “It’s a problem I hear about every day when I travel around the state.”
With no official response from the administration and conversations continue on Capitol Hill, the Farm Bureau has launched a media campaign, filming testimonies with farm workers across the state. Farmers were also encouraged to share their stories with lawmakers in Washington, DC
Cameron Gerber studied journalism at Lincoln University. Prior to Lincoln, he obtained an associate’s degree from State Fair Community College. Cameron is from Eldon, Missouri.
Contact Cameron at [email protected]