Biden’s new tax plan would be a death blow to citrus

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No other industry represents our great state of Florida more than citrus fruits. More than the Sunshine State’s signature crop, we are economic engines contributing nearly $ 7 billion to our state’s economy each year and securing more than 33,000 jobs for Florida families.

Over the past few decades, this industry has proven to be incredibly resilient. We have returned from Asia from hurricanes and droughts and even a killer beetle. But there are massive, industry-disrupting tax hikes from Washington, DC that could be the fatal blow to Florida citrus, making this industry the latest American icon to be shipped overseas and lost to foreign competition.

President Joe Biden has tabled a proposal that would impose a 43% tax on farmers when they sell one land for another. In addition, the President’s new tax proposal will provide for double taxation of farms that will be passed down from generation to generation. Most farmers will have no choice but to give in to the pressures of development, sell their land to construction workers, and stop efforts to grow and harvest our food.

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Breeders work with thin margins. Most of their assets are on the land they own and maintain, but producers have little money to trade. So when the time comes to swap one grove for another, we tend to use what the Internal Revenue Code calls “swaps of a similar nature.” This option allows a farmer to sell land in Area A and use all of the money from the sale to buy land in Area B. Assuming the farmer does not make a profit on the sale, it is a tax deferred transaction. There were no gains on the sale of Area A as the funding went into the purchase of Area B.

When a breeder eventually pays out money and leaves the industry, taxes are owed on those exchanges. But assuming all the money is kept in the closed loop of the business, the IRS does not make an immediate cut. And that’s just common sense.

That would change under Biden’s proposal. Growers could still do similar swaps, but only the first $ 500,000 of deferred profit ($ 1 million for husband-wife growers) could be exempt from tax in any given calendar year. Thereafter, the producers would have to pay the capital gains tax. And under Biden’s plan, the long-term capital gains tax rate will rise from 23.8% today to 43.4% – a record high for the United States and the highest rate in the world.

As bad as this Florida citrus tax hike is, the other is probably worse.

Currently, all Americans pay inheritance tax on their inheritance. It is known as the death tax because the death of a loved one triggers this high tax liability for Uncle Sam. Biden is doubling that tax by adding a second death tax that would apply to anyone who dies with unrealized gains over $ 1 million or a gain that could be made by selling all of their fortune.

When it comes to agriculture, it’s a new tax on the value of farmland, not big houses, fancy cars or yachts. A young farmer who has just inherited his family’s generation old farm would have to pay a capital gains tax rate of 43.4% on his value.

Upon payment of this new death tax, the breeder’s estate would then be subject to the old, pre-existing death tax. This tax over the tax would force citrus companies to sell land, lay off workers, and take other draconian measures just to pay Uncle Sam. For many growers, this will be the last straw.

Farmers, farmers, and ranchers in Florida are already facing too much pressure – from developers, regulators, and others. In the face of the new, extreme double taxes, their children will liquidate the whole company just to escape all of this tax debt. It’s hard enough keeping family businesses from generation to generation without the IRS tipping the scales.

These tax increases proposed by Biden – the restriction on exchanges of the same kind and the introduction of a double death tax – would devastate Florida’s citrus industry. It’s no exaggeration to say that if they pushed through these exponential tax hikes, Florida’s iconic signature crop would be history.

Michael Sparks has worked for the Florida citrus industry for more than 40 years. He is currently CEO of Florida Citrus Mutual, a national trade association whose citrus growers have a total of 2,500 members. The economic contribution of the Florida citrus industry to the state of Florida is $ 9.5 billion annually.