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Rural America needs sound, predictable tax policy

by | Aug 5, 2021 | Opinion

They say that nothing is certain in life ex­cept death and taxes. While those two certainties are undeniable, we need to make sure that family-owned busi­nesses, including farms and ranches, aren’t taxed to death.

Texas boasts more than 248,000 farming and ranch­ing operations, 98% of which are family-owned. These op­erations, along with the other family-owned suppliers and service providers in the agri­cultural supply chain, are the backbone of our rural econo­my. They also contribute ap­proximately $215.53 billion to Texas’ economy each year.

Preparing to pass the ranch to the next generation is a complicated process. We not only have to keep our opera­tion financially viable now, but also must go through a cum­bersome and expensive estate planning process because of the burdensome taxes incurred when we die or transfer our property to heirs.

There are more than 370 mil­lion acres expected to change hands in the next two decades. If we are to ensure that the next generation can build upon our hard work and dedication, Congress must prioritize com­mon-sense tax policy for rural America and preserve long-standing tax provisions which allow family-owned business­es to survive.

As Congress works to enact and fund a comprehensive in­frastructure package, it must make sure that Federal tax pol­icy serves as a tool to facilitate, not hinder, generational trans­fer. Unfortunately, some recent proposals, such as eliminating the stepped-up basis provision, restricting Section 1031 like-kind exchanges, and lowering the current estate tax exemp­tion limits, are completely out of touch with the needs of rural America. These provisions in the tax code are critical in al­lowing farms and ranches re­main in operation.

Taking away these tools would be disastrous for ag­riculture producers. It will destroy the intensive prepara­tions that we have made, using provisions like the stepped-up basis, to ensure the smooth passage of our property to the next generation. Sadly, under these proposals, many fam­ily farms and ranches would be sold just to pay the absurd tax bill that will land with our sons, daughters, nieces and nephews. It will also make land prohibitively expensive for those young and beginning ranchers trying to start or ex­pand their operations.

The success of farms and ranches is something everyone should care about. The work we do and the success of our operations affect everyone every day. Besides raising the food we eat every day, Ameri­can farmers and ranchers con­serve nearly 900 million acres of crop and rangeland, provid­ing wildlife habitat, sequester­ing carbon, and protecting and improving water quality. How­ever, all of this depends on our ability to stay in business.

Federal tax policy that fa­cilitates generational transfer and allows the next generation of producers to build upon the environmental and economic benefits of today’s farmers and ranchers is just as important for fifth-generation producers as it is for first-generation pro­ducers trying to get their start in the industry. Rural America needs sound tax policy because the future of family-owned businesses and family farming depends on it.

Please contact your U.S. Senators and U.S. Represen­tative and urge them to reject any proposal that eliminates or restricts the stepped-up basis, restricts like-kind exchanges, or lowers the current estate tax exemption levels.

By Arthur Uhl, First Vice President of the Texas & Southwestern Cattle Raisers Association. He ranches in San Angelo, Texas.

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