A group of Congress members recently urged President Joe Biden to reverse his plan to cap like-kind exchanges, a policy they say would increase taxes for business owners, particularly small businesses.
Like-kind exchanges allow businesses and property owners to defer taxes on unrealized gains. About 80 percent of the entities that use this tax deferment tool are small businesses.
“Rural communities and family farmers are an important part of our economy in Oklahoma,” said U.S. Rep. Stephanie Bice (R-OK), one of 87 Congress members who signed the letter to Biden. “Ensuring agricultural workers have the opportunity to improve and expand their land or business is critical. Capping like-kind exchanges would not only negatively impact the ag industry, but also small businesses and hard-working families.”
In their letter, the Congress members said Biden’s proposal to cap like-kind exchanges would discourage investment at a critical moment for the economy.
“We urge you and your administration not to damage the livelihood of farmers everywhere by repealing or changing like-kind exchanges,” the members wrote. “For the agricultural community, a cap on like-kind exchanges would limit farmers’ ability to improve their operations through combining acreage, purchasing more productive land, and mitigating environmental impacts. Further, capping like-kind exchanges could make it more difficult to restructure businesses so that young or beginning farmers can join operations.”
The members added that the cap would not only impact farmers but the larger economy.
“It is critical that farmers and small businesses have the freedom to improve their operations in whatever way they see fit,” the members wrote. “This proposed change to the tax code would limit the economic mobility and viability of businesses across the nation. Now is not the time to stunt growth, but to encourage it.”
The American Farm Bureau Federation and the Real Estate Roundtable, which includes 19 national real estate associations, support the effort.
“Like-kind exchanges are important for farmers looking to retire and pass their property on to the next generation, for rural communities that benefit from incentives for economic investment, and for small business owners who are looking to improve and expand their companies. I urge President Biden to abandon his plan to cap like-kind exchanges, which will place a harmful tax burden on farmers, hardworking families, and main street business owners,” U.S. Rep. Randy Feenstra (R-IA) said.