Agricultural News
NCBA Delivers Preserving Family Farms Act: A Permanent Solution to a Generational Issue
Wed, 07 Apr 2021 09:12:51 CDT
The Preserving Family Farms Act of 2021 was introduced by U.S. Representatives Jimmy Panetta (CA-20) and Jackie Walorski (IN-2). NCBA has long supported efforts to reduce undue tax burden on farmers and ranchers. This bipartisan legislation to expand IRS Code Section 2032A would allow cattle producers to take advantage of the Special Use Valuation and protect family-owned businesses from the devastating impact of the federal estate tax, commonly referred to as the Death Tax.
"We thank Representatives Panetta and Walorski for their leadership and dedication to protecting future generations of agricultural producers through the introduction of the Preserving Family Farms Act of 2021," said Jerry Bohn, NCBA president.
The Preserving Family Farms Act increases the maximum amount allowed under the Section 2032A exemption from $750,000 to $11 million (indexed for inflation), thus reviving a critically important tool in the toolbox for farm and ranch families across the U.S. If enacted, this legislation will provide a permanent solution to an issue that has long plagued our nation's cattle producers.
"America's farmers and ranchers deserve certainty in the tax code overall, and they need certainty especially when it comes to the estate tax. Without it, transition planning for the next generation of producers is nearly impossible," Bohn said.
Background:
In the Tax Reform Act of 1976, Congress recognized the disproportionate burden of the Death Tax on agricultural producers and created Section 2032A as a way to help farmers keep their farms. However, the benefits of Special Use Valuations have been stymied over the years as the cap on deductions has failed to keep pace with the rising value of farmland.
While the current 2032A reduction is 55 percent higher than the value established two decades ago, USDA estimates that cropland values have increased by 223 percent. Agricultural land values - including on-farm buildings - have also risen dramatically, increasing by 241 percent during this same period. Due to the rapid inflation of farmland values, the 2032A deduction is no longer aligned with the needs of modern agriculture - nor does it accomplish Congress' intended goal of providing meaningful protection to those producers who are most vulnerable to the estate tax.
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