Democrats have been busy trying to cut taxes for their wealthy donors, but when it comes to Florida farmers, they want to inflict maximum damage. Joe Biden’s new tax plan will hammer Florida citrus farmers with punishing taxation, driving many of them out of business forever. Michael Sparks explains the dire situation faced by Florida farmers if Biden gets his way. He writes in The Ledger:
President Joe Biden has introduced a proposal that will impose a 43% tax on growers when they sell one area of land for another. What’s more, the president’s new tax proposal will impose a double tax on farms passed from generation to generation. Most growers will have no choice but to cave to the pressures of development, sell their land to builders and end the efforts to grow and harvest our food.
Growers operate on thin margins. Most their assets are in the lands they own and care for, but growers have little cash to exchange. Thus, when it’s time to swap one grove for another, we tend to use what the Internal Revenue Code calls a “like-kind exchange.” This option permits a grower to sell land in Area A, and use all the money from the sale to buy land in Area B. Presuming the grower doesn’t make any profits on the sale, this is a tax-deferred transaction. There were no gains from the sale of Area A since the funding was plowed into the purchase of Area B.
Eventually, if a grower does cash out and leave the industry, tax will be owed on these exchanges. But assuming all the money is kept inside the closed circuit of the business, the IRS doesn’t take an immediate cut. And that’s just common sense.
That would all change under Biden’s proposal. Growers could still do like-kind exchanges, but only the first $500,000 of deferred gain ($1 million for husband-wife growers) could be excluded from tax in a given calendar year. After that, growers would have to pay the capital gains tax. And under Biden’s plan, the long-term capital gains tax rate rises from 23.8% today to 43.4% – a record high for the United States and the highest rate in the entire world.
As bad as this tax hike is for Florida Citrus, the other one is probably even worse.
Currently, all Americans pay an estate tax on their inheritance. It’s known as a death tax because the death of a loved one triggers this high-tax obligation to Uncle Sam. Biden is doubling down on this tax with the addition of a second death tax that would apply to anyone who dies with over $1 million in unrealized gains, or a profit one could make if he sold off all of his assets.
When it comes to agriculture, this is a new tax on the value of farmland, not big homes, fancy cars or yachts. A young farmer who has just inherited his family’s generations-old farm to run would be forced to pay a capital gains tax rate of 43.4% on its value.
After paying this new death tax, the grower’s estate would then be subject to the old death tax that’s already in place. This tax upon tax upon tax would force citrus businesses to sell land, lay off employees, and take other draconian measures just to pay Uncle Sam. For many growers, this will be the final straw.
Florida farmers, growers and ranchers already face too many pressures – from developers, regulators and others. In the face of the new, extreme double taxes, their kids will liquidate the whole enterprise just to get out from under all these tax bills. It’s hard enough to keep family farms going from generation to generation without the IRS tilting the scale.
These tax increases Biden has proposed – limiting like kind exchanges and imposing a double death tax – would devastate Florida’s citrus industry. It’s not an exaggeration to say if they pass these exponential tax increases into law, Florida’s iconic signature crop would be history.
Action Line: Biden is so far removed from America it’s shameful. He needs to go. Florida, and other states with governments that care about their constituents, have kept taxes low and allowed businesses to flourish. If your state is destroying your business or retirement with punishing taxation, it’s time to look for a better America.
E.J. Smith - Your Survival Guy
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