Cloture Motion

Floor Speech

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Mr. GRASSLEY. Mr. President, to finance their big spending agenda, President Biden and Members of his party in Congress have called for over $3 trillion in new taxes.

This group claims that these tax hikes are targeted solely to the very wealthy. However, deep down, embedded in their tax-hike proposal, is a direct attack on family farms and resulting ruination of rural communities.

If Democrats get their way, family farms would be decimated through the enactment of a second death tax that operates on top of the existing estate tax. This second death tax would subject the paper gains of business and investment assets to tax upon transfer to the next generation. At the same time, the current long-term capital gains rate would be nearly doubled.

Now, as a result, decades of paper gains in farmland and other property could be subject to capital gains taxes at a rate as high as 43.4 percent.

Given inflation as well as the escalating value of farmland over the past several decades, some Iowa farms could easily generate a half-a- million-dollar tax bill or even more based upon land values alone. And those land values have gone up as a result of inflation and nothing else.

Moreover, according to an analysis by KPMG, family farms captured both by this new death tax and the existing estate tax could see tax rates exceeding 66 percent.

Now, it is pretty simple. That is not taxation; that is confiscation.

Proponents claim this new tax--or you might say this new confiscation--is needed to close a loophole that allows the appreciation in value of property over one's lifetime to go untaxed, but death isn't a loophole, and it shouldn't be a taxable event.

In fact, rather than solving a problem, this proposal would resurrect failed policy from a decade past.

As part of the Tax Reform Act of 1976, Congress experimented with a similar attempt to subject paper gains in inherited assets to tax. This change was immediately met with outcries from farmers, ranchers, and small business owners, resulting in its repeal in a few years.

In fact, it is such a complicated process, it is probably impossible to administer such a tax; at least that was the main point made in the late 1970s against that 1976 legislation.

Now, as problematic as this change was for farmers in 1976, what Democrats have in store would actually be far worse. Where in 1976 no tax was due until an asset was eventually sold by an heir, current proposals could result in a tax bill due in the year of that person's death.

As is often said, and with a lot of truth to it, farmers are land rich and cash poor. This means it is unlikely for a decedent's estate to have cash on hand to satisfy a six-figure tax bill. Now, as a result, all or portions of a family farm might have to be sold to satisfy an oversized tax bill.

This would endanger the continuation of family farms from one generation to the next, and it would devastate rural communities along with it because, you see, most people, if you invest in farmland, you don't invest today because you are going to sell it tomorrow; you invest in it to work it and you work it for a generation and you pass it on to the next generation.

Now, we had one recent study that found subjecting paper gains to a tax at death could cost as much as 80,000 jobs each year over the next decade.

So I say to my Democratic colleagues, pursue this policy at your own peril. I assure you, farmers, ranchers, and small business owners are paying close attention. If you aren't, you better.

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