As a Member of the United States House of Representatives from the great state of Iowa, I have the honor of representing the interests of family farmers, producers, and ranchers. Farming is a way of life for many Iowans, and we all understand how our local farmers help feed and fuel the world.
I have long thought that Congress should work to make the lives of everyday Americans—especially ones who provide the food on our tables—easier, not harder. Unfortunately, there are proposals in Congress that would do the opposite, bringing unnecessary burden to our producers.
Recently, there was movement in Congress to eliminate the stepped-up basis at death on capital gains. Stepped-up basis is the modification of the value of an appreciated asset for tax reasons once inherited. In plain English, a stepped-up basis adjusts the value of an asset when it passes from an owner to their heir.
The higher market value of the asset at the time of inheritance is considered for tax purposes. When an asset is passed on to a beneficiary, its value is typically more than what it was when the original owner acquired it. The asset receives a stepped-up basis so that the beneficiary’s capital gains tax is minimized. A stepped-up basis is applied to the cost basis of property transferred at death.
Many farmers have most of their assets tied up in the family farm because the costs associated with running a farming operation are so high. Eliminating the step-up in basis would force heirs to sell all or parcels of farmland to pay large taxes on assets that they simply cannot afford to pay off when a transfer through inheritance occurs.
In both 1976 and 2010, Congress eliminated the stepped-up basis. In both instances, step-up in basis had to be reinstated because of how negatively the changes impacted family businesses and farms. These measures hit the economy of rural America hard, and we cannot afford to do this again. Hopefully, Congress has learned from its past mistakes on this issue.
During the House Ways and Means Committee markup of their portion of the Democrats’ $3.5 trillion tax and spend package, I was pleased to see the provision to eliminate step-up in basis was removed. There is broad bipartisan and bicameral support to maintain step-up in basis and protect family farmers.
Farmers have faced many challenges in recent years. The COVID-19 pandemic changed every part of our lives and resulted in the closing of countless small businesses including family farms. Unpredictable weather conditions, ranging from last year’s derecho to the current droughts, have created uncertainty in both planting and harvesting.
We need to keep fighting to make the lives of our farmers easier, as we do for all Americans. I am proud to fight for them every day in Congress.
