Wealth tax would protect agriculture
Buffie 21, Nick, Nick Buffie is a Senior Policy Analyst at PPI's Center for Funding America's Future, where he focuses on tax reform, income security programs, pro-growth public investments, and fiscal sustainability. He previously worked as a tax and budget policy analyst at the Center for American Progress, as an economic policy advisor to Pete Buttigieg's presidential campaign, as a research assistant at the Center for Economic and Policy Research, and as an intern at the Institute on Taxation and Economic Policy, The American Families Plan Taxes Billionaires and Protects Family Farms and Businesses, August 30th, 2021, https://www.americanprogress.org/article/american-families-plan-taxes-billionaires-protecting-family-farms-businesses/[AMoss]
In recent months, reporting by ProPublica confirmed that some of the wealthiest billionaires in the United States are paying virtually no income tax on the incredible gains in their fortunes.1 Worse, a massive loophole in the tax code allows these billionaires and other wealthy Americans to escape income tax on their gains for their entire lifetimes—even as regular Americans pay income tax on every paycheck.
To pay for the transformative investments in his Build Back Better agenda, President Joe Biden has proposed tax reforms to close a capital gains loophole favoring the wealthiest Americans. This change is the most important way that Biden’s plan combats the tax code’s preferential treatment of income from wealth over income from work.
Under the American Families Plan (AFP), only a small fraction of Americans—those with very large untaxed gains—would be affected, mainly because the plan exempts the first $1 million of untaxed gains per person.2 And while critics of the president’s plan have argued that it would harm family farms and businesses, these claims are unfounded. As this issue brief explains, many of these claims are based on flawed studies, including some that do not even analyze the actual Biden proposal.
The fact is that under the AFP, the vast majority of Americans—including family farmers and small-business owners—would be exempt from new taxes, since the proposal is targeted at those with large untaxed gains. Moreover, the proposal includes special protections for owners of family farms and businesses who plan to keep their enterprises in the family. Because of these protections, critics’ harshest claim—that the Biden plan would force families to sell their farms and businesses, thereby preventing transfers from one generation to the next—is simply not true.