Jay Duggan May 3, 2021
Elections have consequences, and the biggest consequence for generational family farms is the Joe Biden $6 TRILLION spending spree and the tax plans to pay for it. The US Senate is run by the Democrats, including Amy Klobuchar and Tina Smith, and it is anticipated that the spending and tax bills will pass thru by them in some form.
The taxes in the Biden plan to pay for the socialist woke spending spree may end up changing America more than the spending. The tax bill is designed to crush all the small businesses and farms in America so they cannot be passed to the next generation. Joe Biden and the Democrats want to TAX ALL FARMS AND BUSINESSES AT THE CAPITAL GAINS TAX RATE UPON DEATH. You get to exclude the first $1 million per inheritor, then everything after that gets taxed at 40% AND THEN YOU PAY FEDERAL ESTATE TAX ON WHATS LEFT. National Review has a good explanation of how the plan will work. Below we put it in simple Minnesota terms. Some in the Biden administration have said there will be some kind of exclusion for family businesses, but he also made lots of other promises that turned out not to be worth their weight in manure.
Scenario – Dad and son are working the family farm of 900 acres of good tillable land in Nicollet County. Land great-grandfather bought for a few thousand dollars and handed down. In the past with the Trump $11 million estate tax exemption if Dad died Mom and the son inherit the farm and son keeps on farming, supporting his family and Mom still living on the farm or her care at the nursing home.
CURRENT TRUMP TAX PLAN
900 acre farm value at $7000 per tillable acre = $6,300,000
Current loans to pay for the $750,000 each tractors and combines – $1,500,000
Income SPLIT BETWEEN TWO FAMILIES after current expenses and the $1.5 million loan payments = $150,000 (an approximate based on the last 4 yrs of avg returns)
Current tax bill for son to keep farming under Trump tax plan – $0
NEW JOE BIDEN TAX – 40% on $4,300,000 = $1,720,000 IN TAXES (after the $1 million exclusion for the son and $1 million for Mom)
Loan payment to borrow $1,720,000 at 4.5% 30 yr loan to keep the farm = $105,000 per year.
Farm income reduced to $45k to support Mom in retirement and the son’s family. $45k will not even cover 1 year of Mom in the nursing home when the time comes. A single bad year in farming, which are frequent, means negative income. This isn’t a realistic option. The farm will be sold when Dad dies. The farm gets bought into consolidation by big ag. 1 less customer for the local implement dealer. 1 less member of the co-op. 1 less customer for the local oil company. 1 less customer for the seed dealer, 1 less family on main street buying food/shoes/cars/etc, and 1 less set of kids for the school district. THIS MATH WORKS THE SAME FOR FAMILY RESORTS ALL OVER MINNESOTA. How many resorts are sitting on millions of lakeshore property that generate nowhere near enough income to pay a loan for a 40% estate capital gains tax bill?
CONGRATULATIONS BIDEN AND KLOBUCHAR. YOU JUST KILLED THE GENERATIONAL FAMILY FARM! The pain is exactly the same for inherited apartment buildings, hardware stores, resorts, restaurants, and all sorts of small businesses throughout Greater Minnesota in small towns where the business throws off income at a very low rate of return compared the value of the land or business. The Joe Biden and Amy Klobuchar tax plan is cyanide for the family farm and Rocks & Cows territory towns and economies. The big Democrat corporations and government step in to fill the void. Just like they planned. The Democrat tax plan isn’t a political fight. Its a war of extinction on the Rocks & Cows.
Why is Empty Amy Klobuchar at war with 80% of her own state? Tell her to stop supporting the new capital gains death tax! Mpls office # 612-727-5220. Senator Tina Smith doesn’t even pretend to care, so don’t bother.
It’s not just a logo. Its a way of life. Our way of life. Tell them they can’t have it!