Costa, Axne Lead Effort to Protect Family Farms

May 6, 2021
Press Release

Letter to key House leaders signed by 13 farm district Democrats urges House leadership to exempt family farms from any changes to ‘stepped-up basis’

WASHINGTON – Representatives Jim Costa (CA-16 and Cindy Axne (IA-03) led a group of thirteen House Democrats who represent farm districts in a letter to House leadership urging the exemption of family-owned farms from any potential changes to the stepped-up basis for capital gains in tax law.

The members raise concerns about the potential devastating impact that changes to capital gains taxes would have on family-owned farms. The changes would require immediate taxation of the property’s increase in value, which could force unaffordable tax burdens on longtime family farm operators, many of whom have farms that have been handed down over multiple generations.

“Farmers responsibly pay taxes to contribute their fair share to our country,” said Rep. Costa, a third-generation family farmer. “They should not have to face tax burdens to pass their land from one generation to the next. This is how we keep generations of families farming. Therefore, we need to maintain protections to ensure the long-term success of family farms. They are the backbone of economic activity in rural areas, and we know the production of food and fiber is a national security issue.”

“Iowa’s family farms have been a cornerstone part of my state’s economy for centuries, and I’ve heard concerns about this potential change directly from them – including from some whose land has been in their family since the Civil War,” said Rep. Axne. “While I believe that the wealthiest in this country should pay their fair share when it comes to paying for robust new infrastructure investments, a change to capital gains inheritance laws that eliminates stepped up basis could inadvertently force generations of family farms to sell parts of their land and livelihoods. With this letter, I hope House leadership recognizes that there are a significant number of Democrats who will want to see this exemption included in any bill that makes those changes.”

In their letter to House Ways and Means Committee Chairman Richie Neal, House Majority Leader Steny Hoyer, and Speaker of the House Nancy Pelosi, the members detail how a change ‘stepped-up basis’ could impact family farms.

“While the ability to simply sell a small part of an asset may work for those with shares of stocks, [a change] would force farmers to break up land that may have been in their family for decades and seriously impact their ability to remain economically viable,” the members wrote. “Farms, ranches, and some family businesses require strong protections from this tax change to ensure they are not forced to be liquidated or sold off for parts, and that need is even stronger for those farms that have been held for generations.”

The letter also highlights President Joe Biden’s reference to the need for such an exemption in his original outline of the American Families Plan, and emphasizes that no version of the plan should move forward without that exemption.

 “We appreciate the President’s reference to this burden and the need to address it in the outline of the American Family Plan,” the members wrote. “As representatives for districts that would be directly impacted by that change, we hope you will see us as a resource as we work to make that exemption a reality… We would ask that you work closely with representatives of rural districts like us to ensure those protections are well executed.” 

The letter was signed by Reps. Axne, Costa, Julia Brownley (CA-26), Cheri Bustos (IL-17), Salud Carbajal (CA-24), Angie Craig (MN-02), Antonio Delgado (NY-19), John Garamendi (CA-03), Josh Harder (CA-10), Kurt Schrader (OR-05), Abigail Spanberger (VA-07), Tom O’Halleran (AZ-01), and Kim Schrier (WA-08).

The full text of the letter can be found here.