In April, President Biden announced the American Families Plan (AFP) that promises billions of dollars as "an investment in our kids, our families, and our economic future." But deep within the proposal, it describes gains on property transfers would be considered a taxable event.
Conservative news outlet The Center Square called out the Biden administration on Thursday for attempting to "destroy Iowa family farms" through the proposed AFP property transfer tax.
AFP describes gains on property transferred at death or by gift would exclude up to $1 million per taxpayer. The exclusion would be indexed for inflation after 2022.
Craig Hill, the president of Iowa Farm Bureau, calls the proposed transfer tax a "major threat" for family farms in the corn-growing state who pass along significant sums of farmland to the next generation to work.
AFP can be compared with Biden's Rural Plan that calls for "partners with rural communities to invest in their unique assets, with the goal of giving young people more options to live, work, and raise the next generation in rural America – making sure the wealth created in rural America stays in rural America."
The Rural Plan says it will "make it easier to pass farms and ranches onto the next generation."
However, Hill told The Center Square that is not the case. He said the transfer tax could devastate some families who don't have enough money to pay the tax because land values have been artificially inflated with cheap money from the Federal Reserve.
Crunching numbers, the planned exemption for a married couple is a million dollars. Anything above, the couple would be taxed at 40%. Given typical Iowa farm size is 359 acres on average at $7,559 per acre, that would leave the couple with $1.7 million exposed to taxes. After the exemption, this means they might owe $680,000.
Given that farmers have already experienced a decade of depressed farm income and razor-thin margins, the ability to pay a hefty tax on a land transfer could force lower-income farmers to sell.
Sen. John Boozman of Arkansas serves as the top Republican on the Senate Committee on Agriculture, Nutrition, and Forestry, said the "land swap tax would dry up the farmland market, create barriers to entry for new or beginning farmers, and stunt agriculture business growth and reinvestment in much of rural America."
So what's the real agenda of the Biden administration pushing the tax proposal ahead that could wreck small farmers and force them to sell? Well, we can only speculate vultures like Bill Gates and big Wall Street private equity firms circling the Midwest waiting for distressed farm sales.