Sen. Marshall: Encourage Next Generation to Return to the Family Farm, Don’t Tax Them In To Bankruptcy

(Washington, D.C., June 21, 2021) – U.S. Senator Roger Marshall, M.D. spoke on the Senate floor today about the Democrats’ plan to task hard-working agricultural producers with financing their roughly $5 trillion reckless tax and spending bill through the removal of stepped-up basis.

You may click HERE or the image below to watch Senator Marshall’s speech in its entirety.

Additionally, Senator Marshall joined his colleagues today in sending a letter to President Biden urging him to abandon his effort to impose a capital gains tax increase on family-owned businesses, farms, and ranches. You may click HERE to read the letter in its entirety.

Earlier this month, Senator Marshallpenned an op-ed for the Goodland Star-News to lay out the devastating consequences of the Administration’s plans to hit farmers with extreme tax increases. You may click HERE to read the op-ed in its entirety.

Full Text of Senator Marshall’s Remarks:

Mr. President, over the last few weeks, I’ve been home and many people were wrapping up wheat harvest. Absolutely one of the biggest joys of the entire year when a year’s worth of hard work comes to fruition. And every corner of the state was speckled with combines, tractors, grain carts, and trucks – all doing their part in the harvest process. Inside those implements were fathers, sons, sisters, mothers, and brothers, and my cousins, all working side-by-side to harvest the crop that will provide the financing for land payments, equipment loans, operating loans, and next year’s inputs like seed and fertilizer.

Agriculture is a capital-intensive industry, much more than I could have ever imagined. Harvesting wheat requires at least four different pieces of machinery – many costing $250,000, $500,000 or more each. It takes years for a farmer to build enough equity to purchase a new piece of equipment or land, and for many families it is only by passing down the land and equipment that a family farm can remain viable. This is the only way a young farmer can truly survive. The common saying in Kansas is that farmers live poor but die rich.

Across this great nation, contrary to people’s beliefs, 98 percent of farms and ranches are family-owned. Those families produce much of the food, fuel and fiber we consume here in the U.S. and around the globe. These family farms, many in their fourth like mine, fifth generation, or even sixth and seventh generation farms are out there now. They endure turbulent weather, inconsistent market conditions and tight labor markets. It seemed like growing up, a week never passed that my dad never looked at me and said, “You know, farming has to be the biggest gamble there is in America.”

In 2017, Republican-led government passed the Tax Cuts and Jobs Act (TCJA), which provided sweeping tax changes to encourage private entrepreneurship and economic growth. The Taxes and Jobs Act, the exemptions for the estate tax, as we call it the death tax, more than doubled, keeping most family farms safe from redundant government taxation.

But now, the current Administration and some of our friends across the aisle want to task our hard-working agricultural producers with the financing of their roughly $5 trillion reckless tax and spending bill.

I think President Eisenhower, or Ike as we call him, a fellow Kansan, hit the nail on the head when he said, “You know, farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.”

First, they proposed not only eliminating stepped-up basis on realized property, but also on unrealized assets at the time of the owner’s death. Their proposal would tax unrealized capital gains over $1 million at ordinary income tax rates, which would be levied at the top marginal rate of 39.6 percent.

That means the next generation inheriting land and equipment would have to pay taxes on the increase in value, even if the property is never sold. Secondly, the Administration has proposed lowering the exemption to the death tax from $11.7 million under the Taxes and Jobs Act to $3.5 million per person and increasing the top tax rate from 40 to 45 percent.

Consequently, a family farm commonly would have to sell off 1/3 of their land to keep going from generation to generation. And the buyers unfortunately will be large corporations or foreign entities.

According to a report published by Texas A&M’s Agriculture Food and Policy Center, under current law only 2 of their 94 representative farms would be impacted by an event triggering a generational transfer of property. To contrast this, up to 98 percent of their representative farms would see higher tax burdens, if certain parts of the Administration’s plan was enacted.

From 1997-2020, in Kansas, cropland values have risen 220%. In some parts of the United States they’ve increased over 500%. If there was a 20% capital gains tax on those valuation increases, the average Kansas farmer would have a new tax obligation of nearly a quarter of a million dollars.

These numbers are simply unbearable.

I want to stop and pay homage to my grandfather. And both of my grandfathers who had fourth and fifth generation farms. These farms were bought in the early 1900s. Both farms have been in the family over 100 years. I would suppose both of my grandfathers paid less than $100 per acre. Today, those farms maybe they’re worth $1,000, $2,000 an acre. But if you can imagine that tax burden of trying to pass down that farm and pay for that stepped-up basis, for the tax on the increase in that property. It simply isn’t going to happen. None of us have brothers and sisters and cousins that had that type of cash available.

We want to encourage the next generation to return home to the family farm, not tax them in to bankruptcy. America will see millions of acres of land and billions of dollars of equipment change hands over this next decade.

While the current Administration contests that only a small percentage of our farm families will be impacted by their proposed changes, all evidence really indicates otherwise.

The administration fails to consider the several realties of multigenerational farms with some siblings staying on the farm and some selling their interest. Any changes to the estate tax and opportunities to pass assets from one generation to the next will lead to further consolidation in the ag industry, fewer young families returning home to their rural communities, and more rural Main Street businesses closing shop.

We cannot allow this Administration to saddle our hard-working farming families with the responsibilities of funding their socialist agenda. Agriculture is still responsible for 40 percent of the Kansas economy. We must do all we can to ensure our farm families have every opportunity possible to continue their way of life, and bring the next generation back to the farm and keep rural America alive and well.

Thanks you Mr. President, I yield back.