Sen. Chuck Grassley (R-Iowa) today questioned President Biden’s nominee to head the Office of Tax Policy within the Department of Treasury on the potential devastating effects repealing stepped-up basis rules could have on American family farms and small businesses.
In a Senate Finance Committee hearing today, Grassley questioned Lily Lawrence Batchelder, nominee to be an Assistant Secretary of Tax Policy, on how President Biden plans to change rules related to transferring appreciated assets without hurting family farms around the country.
Transcribed remarks of Sen. Grassley [VIDEO]:
There’s been a big concern in my county meetings that I had over the last Easter break and May break about the stepped-up basis. Farmers and small businesses are concerned about it. I’m going to give you a little bit of history that you probably know the details of as much as I do. Congress experimented with something similar to the President’s stepped-up basis proposal in the Tax Reform Act of 1976. This proposal did not subject the gains to an immediate tax but generally replaced the stepped-up basis with the carry over basis. This proved very unworkable and led to outcries. I was just a member of the House at that time and wasn’t even on the Ways and Means Committee but this outcry led me to work with Senator Byrd of Virginia. And what we did at that particular time, Congress almost immediately postponed the rule, and ultimately repealed it in 1980. Now the president’s proposed transfer tax has some of the same problems of trying to determine basis after an owner has passed. Particularly, if a farm has been in the family for generations, it’s almost nearly impossible to determine basis.
So the first question is, given this has proven unworkable in 1976, why do you think this time, it’s any different? And in regard to the second question along the same issue of the stepped up basis, the President’s description of the proposal claims it will have protections for family farmers and businesses but has no specifics… can you provide any detail on what protection’s family farmers and small businesses would have so that we don’t repeat it?
Grassley is a longtime advocate for tax protections so that family farms can continue to be passed down from one generation to the next. He is also a consistent proponent of repealing the death tax. Last month, Grassley authored a Q&A discussing the negative effects of inheritance taxes for the nation’s farm economy.
Original source can be found here.
