Tax increases proposed by President Joe Biden “would devastate Florida’s citrus industry,” Florida Citrus Mutual CEO Mike Sparks wrote in a recent editorial. The editorial was in The Ledger, a newspaper in Lakeland, Florida.
Biden’s proposal would impose a 43% tax on growers when they sell one area of land for another, Sparks stated. Most growers’ assets are in their land and they have little cash, he added. “Thus, when it’s time to swap one grove for another, we tend to use what the Internal Revenue Code calls a ‘like-kind exchange,’” he wrote. “This option permits a grower to sell land in Area A, and use all the money from the sale to buy land in Area B. Presuming the grower doesn’t make any profits on the sale, this is a tax-deferred transaction. There were no gains from the sale of Area A since the funding was plowed into the purchase of Area B. Eventually, if a grower does cash out and leave the industry, tax will be owed on these exchanges. But assuming all the money is kept inside the closed circuit of the business, the IRS doesn’t take an immediate cut. And that’s just common sense.”
“That would all change under Biden’s proposal,” Sparks stated. Growers could still do like-kind exchanges, but only the first $500,000 of deferred gain ($1 million for husband-wife growers) could be excluded from tax in a given calendar year. After that, growers would have to pay the capital gains tax. Under Biden’s plan, the long-term capital gains tax rate rises from 23.8% today to 43.4%, Sparks reported.
Another Biden tax proposal is probably even worse, Sparks stated. He explained that all Americans currently pay an estate tax on their inheritance. “Biden is doubling down on this tax with the addition of a second death tax that would apply to anyone who dies with over $1 million in unrealized gains, or a profit one could make if he sold off all of his assets,” Sparks wrote.
Sparks stated that a young farmer who has just inherited his family’s generations-old farm would be forced to pay a capital gains tax rate of 43.4% on its value.
“It’s not an exaggeration to say if they (members of Congress) pass these exponential tax increases into law, Florida’s iconic signature crop would be history,” Sparks concluded.
Source: The Ledger
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