Arising from early criticism of the American Families Plan, the White House has issued clarifying statements intended to deflect opposition to changes in taxation that could affect farmers. Although it is proposed to increase the capital gains tax rate to 40 percent for households making over $1 million annually, exceptions will apply to inherited assets especially within the farming community.
The plan would eliminate the "stepped up basis" for gains in excess of $1 million. The American Families Plan Reform of taxation will protect family-owned businesses and farms that are bequeathed. It has yet to be decided whether unrealized gains will be taxed at death or only when inherited property is sold. Congress is certain to scrutinize provisions of the American Families Plan and vested groups will as usual engage in lobbying resulting in a more complex tax law that will be subject to interpretation by professionals and result in legal challenges.