TAX INCREASES
Congressional Record Vol. 167, No. 128
(Senate - July 21, 2021) PDF
Mrs. HYDE-SMITH. Mr. President, I appreciate the opportunity to join
a number of my colleagues representing farm States to sound the alarm
to the millions of rural Americans who will be harmed by proposed tax
changes outlined in the American Families Plan. Described as a plan to
help American families, it would do the exact opposite for farm
families across the United States.
The most concerning changes to the Tax Code include decreasing the
estate tax exemption, increasing capital gains tax rates on transfers
of property to heirs, and increasing taxes on appreciated assets, such
as farmland, which has increased in value very significantly in recent
years.
These misguided proposals fail to take into consideration the fact
that farmers in general are highly vulnerable to these types of tax
changes, as land and equipment comprise most of the farmer's net worth.
If enacted, these tax provisions would strongly discourage and make
it more difficult for our next generation to get into farming. The
provisions would create significant hurdles from a financial
perspective, to say the least.
With the average age of U.S. farmers being nearly 60 years old, do we
really want to force surviving spouses or heirs to sell half of the
farm they inherited simply to continue farming the land that has been
passed down for generations?
Family farms are the backbone of American agriculture. Roughly 98
percent of all U.S. farms are family owned and operated. Whether you
like large family farming operations or not, they account for 44
percent of total U.S. farm production annually. That is a staggering
figure, given that American farmers contributed $136 billion to the
U.S. gross domestic product in 2019. These people who put food on our
table and clothes on our back do not need to go out of business because
they are being taxed at every turn, punished for their achievements and
sacrifices.
Initial reports from the Biden administration suggested that the
proposed tax changes I am discussing would have very little impact on
America's farmers and ranchers. However, recent research and analysis
conducted by Texas A&M University paints a very different picture.
For instance, should the proposed capital gains tax changes and
generational transfers become enacted into law, nearly all U.S. family
farms would face higher taxes. Nationwide, the average additional tax
liability per farm under the capital gains tax change would be
$726,104. Mississippi would be the State most heavily affected, with an
average additional tax liability per farm of $2.1 million. It is
totally unbelievable.
Should the estate tax changes become law, recent analysis also
determined that nearly half of all U.S. family farms would face higher
taxes. The average additional tax liability per farm nationwide would
be $2.2 million, and the fifth most heavily impacted State would again
be Mississippi, with an average additional tax liability per farm of
$4.6 million. That is totally incredible. As a former ag commissioner
of Mississippi, I personally know these farmers and their families.
This is truly unbelievable.
More than 3 years of net cash farm income would be needed to meet
these additional tax obligations alone. That is simply unmanageable. I
am perplexed as to why Democrats want to place the highest tax burden
on one of the most economically challenged and socially disadvantaged
States in the Nation, my home State of Mississippi.
Let's not forget that in rural America, the primary source of jobs
and income are often associated with agriculture. It is the No. 1
industry in Mississippi, employing more than 17 percent of the State's
workforce either directly or indirectly.
If family farms are taxed out of business, far more than the farmers
will suffer. Low-income and minority populations across rural America
will lose jobs and be forced to rely on government support. I hope this
is not the underlying plan of my Democratic colleagues.
Let me be clear. For those who are willing to pay for reckless
spending by punishing America's farmers and ranchers and everyone who
relies on them, you will be doing far more than just that. You will be
running off our next generation of farmers. You will be making it
easier for large corporations owned by foreign adversaries, such as
China, to buy up available farmland, and you will be ensuring that
every American pays more for the food they eat and the clothes they
wear. The list goes on.
I know there is a deep desire on the other side of the aisle to enact
a reckless tax-and-spending spree that makes Americans more dependent
on the Federal Government, but family farms cannot be caught up in the
administration's punitive dragnet to find ways to pay for it.
Any changes to the Federal Tax Code should be geared toward
supporting economic growth and helping the next generation keep these
family-owned operations alive. I hope that we can all come to our
senses on this.
I yield the floor.