The Family Business Estate Tax Coalition (FBETC) released an EY study this week, quantifying the impact a repeal of stepped-up basis would have on family businesses.
The EY study found that family-owned businesses and the local economies they support would be hit hardest by a repeal. Based on the analysis of the study, this tax increase, whether via tax at death or carryover of basis, will have negative impacts on family-owned businesses, U.S. gross domestic product (GDP) and job creation both in the immediate and long term. Repeal of stepped-up basis would impose a tax burden on top of the existing estate tax regime, further compounding these negative impacts.
The National Cattlemen’s Beef Association (NCBA) has long advocated for the preservation of this long-standing provision of the U.S. tax code, as well as other sound tax policies for rural America, and has been an active supporter of this study.
“The EY study sheds light on the facts that we at NCBA — among others in the agricultural community — have long known. Simply put, the repeal of stepped-up basis would have catastrophic impacts on the ability of farmers and ranchers to transfer their operations to the next generation,” said NCBA Senior Executive Director of Government Affairs Danielle Beck.
American Farm Bureau Federation President Zippy Duvall said, “Farmers and ranchers have been able to pass their farms on to the next generation thanks to the stepped-up basis tax provision. The value of many farms is tied up in land and equipment and most farmers don’t have large amounts of money on-hand to pay capital gains taxes. They could be forced to sell the farm or take out costly loans just to pay capital gains taxes. Eliminating the stepped-up basis isn’t a tax on the rich – it’s a tax on the middle class. We urge President Biden to remain true to his word that he won’t increase taxes on hardworking, middle-class Americans.”
The full report with executive summary can be found here.