Election Day has come and gone for Missourians but its final impact is still uncertain. While President Trump has not conceded the presidential race, he continues to trail in the vote count. If this holds true and Joe Biden becomes President, his proposed agenda could significantly affect the agriculture community. But realistically, Biden would only be able to enact the most aggressive parts of his agenda if Congress is on his side.
Given the current status of the election, we will not know the final power balance until January. Control of the U.S. Senate will come down to the results of the two runoff elections held January 5 in Georgia. If Democrats win both seats, they would secure a 50-50 partisan split. This tie would be broken by the sitting Vice President. If this person is now-Senator Kamala Harris, we could be in for some significant changes to current law.
For farmers, one of the biggest unknowns is the future of tax law. Agriculturalists have long fought against the Estate Tax, also known as the Death Tax. This harsh and punitive tax disproportionately affects farm families. They often have modest liquid assets but many acres of land that has appreciated over their years of hard work and slim margins. If they get hit with this tax, grieving families often have to sell off substantial portions of the family farm just to pay Uncle Sam.
The 2017 Tax Cuts and Jobs Act offered farmers significant Death Tax relief. It doubled the exemption level, or the amount of assets someone can pass down before the tax kicks in, and lowered the top rate from 39.6 percent to 37 percent. According to an analysis by the American Farm Bureau Federation (AFBF), only about two percent of Missouri farms are now subject to this increased exemption level.
Former Vice President Biden has proposed reverting to 2009 exemption levels. This change would decrease the threshold by 70 percent. This would more than triple the number of Missouri farms subject to the Death Tax, according to the same AFBF analysis. Forty-five percent of farmed acres would belong to farms subject to the tax.
In some of Missouri’s most productive areas, less than 500 acres of farmland would put a family over the threshold. These days, many single fields are bigger than that, never mind the entire farming operation.
Needless to say, Missouri farmers and estate planning attorneys will be paying close attention to the Georgia runoffs. Regardless of who wins, Missouri Farm Bureau will work hard to ensure farm families are not unfairly burdened by this tax.