Biden to exempt farms in plan to eliminate stepped-up basis
As proposed, broader tax code changes take into consideration important saving of step-up basis for farmers.
Jacqui Fatka, BEEF Magazine
Apr 28, 2021
In his first address to Congress Wednesday night, President Joe Biden will unveil his American Families Plan which calls for changing the existing tax code handling of capital gains and eliminating stepped-up basis. However, his plan will offer protections for family-owned businesses and farms who pass on the entity to their heirs.
In a call with senior White House officials Tuesday evening ahead of the speech, one official notes the plan would address the loophole in the existing tax code that allows the wealthiest Americans to entirely avoid income taxes on their gains by holding assets for their entire lifetime and passing it on to their heirs.
“This reform will be designed with explicit protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run those businesses,” the senior official notes.
While offering details of the tax plan, the White House official adds, “The conceptual framework for equalizing the tax treatment of capital gains and ordinary income is neither new nor novel. It was a key feature of President Reagan's tax reform where he increased capital gains rate to match the personal income tax rate.”
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