The American Farm Bureau Federation is urging Congress to reform the capital gains tax. The group submitted a statement to a joint hearing of the House Ways and Means and Senate Finance Committees on tax reform that said the cumbersome tax makes it difficult for current farmers to pass the torch to a new generation of agriculturalists. Since approximately 40-percent of farmland is owned by individuals age 65 or older – the statement reads – capital gains taxes provide an additional barrier to entry for young farmers and ranchers at a time when it is already difficult for them to get in to the industry. The Farm Bureau statement continues – capital gains tax liabilities encourage farmers to hold onto their land rather than sell it – creating a barrier for new and expanding farms and ranches to use that land for agricultural purposes.
According to Farm Bureau – 40-percent of all farmers report some capital gains – nearly double the share for all taxpayers. Further – the average amount of capital gains reported by farmers is about 50-percent higher than the average capital gain reported by other taxpayers. Farm Bureau states – because capital gains taxes are imposed when buildings, breeding livestock and land are sold – it is more costly for producers to shed unneeded assets to generate revenue to adapt, expand and upgrade their operations. The statement goes on to note – this is neither good for the long-term prosperity of farm and ranch operations or for the rural economies their operations help sustain.
The top capital gains tax rate will increase by a third on the first of the year – from 15-percent to 20-percent. Farm Bureau supports a permanent extension of the 15-percent rate.