5th district Congressman Bob Latta is trying to prevent increased taxes for family-owned farms and businesses that get passed down to the next generation.
President Biden has called for eliminating the stepped-up basis tax provision that is used when family-owned farms and small businesses get taken over by their heirs. Latta says that a stepped-up basis is a long-running provision in the tax code that prevents the next generation from paying capital gains tax on inherited assets like land, equipment, or buildings. Latta and over 70 other congressmen signed a law to stop the ending of stepped-up basis.
“If you get rid of stepped-up basis that means, if the family bought the farm 50, 60, 70 years ago and they are passing (it down), you are going to pay capital gains on that. That is what they are saying,” says Latta. “What stepped-up basis does, says you get it at the value of the date of death and so you don’t have that. They are also decreasing the amount of the deduction.”
According to the U.S. Department of Agriculture, 98% of farms are family-owned and if the stepped-up tax basis is eliminated 66% of all mid-sized farms would see increased tax liability.
