By Jim Mundorf
"The great searcher of human hearts is my witness, that I have no wish, which aspires beyond the humble and happy lot of living and dying a private citizen on my own farm."— George Washington
I don't care who you voted for, or your thoughts on the election. Joe Biden is the President and as much as I try to stay out of politics, his proposed tax plan is now the greatest threat to destroy family owned farms and ranches that America has ever seen. According to Farm Progress Magazine, "Biden has two features in his (estate tax) plan, and one is unfortunate, but the other is disastrous for farmers."
LAND RICH CASH POOR
Over the past 20 years agriculture land prices have skyrocketed. In my neighborhood, (southwest Iowa) farm ground has gone from around $900 per acre in the '90s to well over $7,000 per acre now. Farms that were were a few hundred thousand, 25 years ago, are now worth millions. So farmers have found themselves in a unique position. If they own the land they work on, they can keep working for an unstable living that is always dependent on the weather and markets, or they could sell out and become multi-millionaires. For most people this seems like it would be an easy decision. For most farmers they don't think twice about it…they stay, and keep working.
So why do they keep it? A big reason for keeping the farm has always been to pass it on. And now that there are fifth, sixth, and seventh generation farmers and ranchers around. Passing the farm down to the next generation has become a sacred tradition. The end goal of a life's work. As Paul Harvey says at the end of his speech, turned commercial,
Somebody who'd bale a family together with the soft strong bonds of sharing, who would laugh, and then sigh, and then reply, with smiling eyes, when his son says he wants to spend his life 'doing what dad does… So God made a farmer.
UNFORTUNATE AND DISASTROUS
Unfortunate – The "unfortunate" part of Biden's proposed tax plan is the elimination of the stepped-up basis. The stepped-up basis has been used for all inheritance for generations. How it works is that when property is inherited, it doesn't matter what the dead person paid for it, the value is stepped-up to what it is worth at the time of the death. This allows the person who is inheriting the property to show no gain in income from the inheritance.