PEORIA, Ill. — Whether your presidential candidate won or lost on Election Day 2020 farmers should anticipate there will be significant pressure for Congress to enact post-election tax increases due to 2017 tax reform and COVID-19 stimulus funding. This is according to Brian Kuehl, KCoe Isom director of legislative affairs, and KCoe Isom tax specialist Kevin Bearley, who joined an Oct. 30 webinar on potential post-election changes to farm and tax policy hosted by the Illinois Soybean Association (ISA).

“It’s pretty rational, given the deficit, that we are going to see a tightening of the belt. I think that will be reflected both in efforts to rein in spending and increasing revenues. Regardless of who wins and who controls the Senate, we can expect the tax code will continue to change and some of that will end up on the shoulders of farmers,” Kuehl projected. 

Tax code changes could likely include raised estate taxes, Bearly cautioned. “I don’t see any way, even if Republicans retain the Senate and the presidency, that taxes will not go up, simply because we are running a deficit that is out of control right now,” he said. “The Democratic-cotrolled House will be looking to introduce bills to increase taxes. The estate tax system is going to continue to be a political football for the two parties.”

Doing away with the estate tax system first became a focus of the Republican party in the 1970s, according to Bearley, and gained momentum two decades ago under the leadership of President Bush. 

“The Democrats believe our forefathers wanted an estate tax system because they didn’t want the European system where ten families inherited all of the property in this country as they did in Europe. So we have this real head-butting that occurred in the late 1990s and the early 2000s,” said Bearley, while acknowledging that the GOP has twice had the opportunity to repeal the estate tax system through majority leadership and hesitated to do so since the Bush administration. 

Legislation enacted in 2017 allows individuals to possess up to around $11.5 million in assets in their estates to “either die with or to give away during their lifetimes,” Bearly noted, while assets in excess of $11.5 million are subject to a 40 percent tax. Prior to the early 2000s, estate tax rates soared to as high as 55 percent before being locked in at 40 percent during the Obama administration. In 2010, there was no federal estate tax system.

“The good news is that if you are in the ag production business, there is a perfect estate plan for you,” said Bearley, who advises farm families to consider modifying their estate tax plans to take advantage of the benefits provided in the 2017 tax reform. 

As far as policy, farmers can expect some changes in such areas as climate change and the environment under the administration of Joe Biden, who was declared the 44th president of the United States on Saturday, Nov. 7.

“Ethanol and biodiesel policy is a really big issue in the Midwest over the last four years with the ethanol waivers that President Trump issued. More recently he has been denying these waivers to small refineries,” said Kuehl. “Relabeling of pumps and tax issues related to ethanol and biodiesel are also on the table. (President elect) Biden has said good things about and supports ethanol and E15 expansion, so hopefully we would not see small refinery waivers like we have seen over the last four years.”

The direction of international trade will likely be altered under Biden’s leadership, Kuehl noted. “A lot of work to do, but we in the ag community need to put our weight on the line and say ‘look, we need to keep these markets open, we need to get exports increasing,’ which is the bread and butter for corn and soybeans,” he said.

Kuehl said he is hopeful that under the next administration the USDA’s Farm Service Agency will reverse course on a recent ruling that changed how farm payment program eligibility is determined. “They issued this rule without any public input, they didn’t hold a comment period and they really kind of screwed the rule up,” Kuehl stated. “One of the things they changed is how they assess eligibility with respect to the percent of management commensurate with your ownership stake in your operation.”

Though what the president can do is largely dictated by which party controls the chambers of Congress, substantial changes could occur under a Biden presidency if Democrats manage to wrest control of the Senate away from Republicans in the January 2021 Georgia Senate runoffs.

According to policy analyst Jim Weismeyer of Pro Farmer, Biden will seek changes in climate change, health care and infrastructure policy during his first two years in office. 

“The ag sector would have impacts from all three of those topics, including pushing for a new revenue stream via carbon credits, getting better health care at a more affordable cost for rural America and improving the rural infrastructure,” Wiesemeyer stated in his October 29 column. “On the flip side of this, eliminating CO2 emissions could result in negotiations that are costly for producers to meet while driving up costs for an energy-intensive sector.”

In a presidential candidate questionnaire published by the American Farm Bureau Federation, Biden laid out his platform for farm policy programs, international trade and tax policy, among other topics. Here are excerpts from Biden’s responses to the AFBF questionnaire:

Farm Policy Programs:

 “A Biden-Harris Administration will understand the important role crop insurance plays and will make sure the safety net is there for those who need it...We also will strengthen our agricultural sector by pursuing a trade policy that works for American farmers...We will reinvest in land grant universities’ agricultural research so the public, not private companies, owns patents to agricultural advances…A Biden-Harris Administration will support beginning farmers...And, we will strengthen antitrust enforcement. From the inputs they depend on – such as seeds – to the markets where they sell their products, American farmers and ranchers are being hurt by increasing market concentration.”

International Trade:

“We will develop a comprehensive strategy to aggressively enforce our laws in an effective way whenever it is needed. Critically, we will also look at what new approaches and tools are needed to combat unfair trade practices jeopardizing production and jobs here and to gain access for our products in other markets. We must address the continuous efforts to evade and circumvent our trade laws and undermine the effectiveness of our trade cases. The issues of global overcapacity, foreign state-owned enterprises, and other problems undermine our interests and can’t continue. Workers deserve to know that their government will stand by their side and stand up for their rights so they don’t have to fight unfair trade on their own or see their jobs offshored and production outsourced. Foreign cheating will not be allowed in our administration.”

Tax Policy: 

“We are committed to a set of fiscal policies that encourage American prosperity and benefit American businesses across the economy--not just the well-connected few. We will work with Congress to implement a fair, permanent tax code that provides certainty to plan for the future, while abolishing incentives that reward companies for offshoring production or avoiding taxes by using tax havens. In addition, we will raise the corporate tax rate to 28 percent, rolling back the Republicans massive $1.3 trillion giveaway to corporations and putting small businesses on equal footing with large corporations. This additional revenue will be used to make investments in households and businesses around the country, including those that will help farmers and ranchers boost their productivity and better compete in world agricultural markets.”

Whether or not your candidate was elected president or won any other key down-ballot races, the Farm Bureau will remain committed to representing farmers’ and ranchers’ interests at the county, local and state levels, said Mark Gebhards, executive director of government affairs for the Illinois Farm Bureau.

“We are a bipartisan organization, and that is critically important to our ability to be at the table, to be in the room and to be successful in advocating for our policy positions,” Gebhards remarked in a November 5 radio interview. “We’ve been through change before. We’ve dealt with administrations as they come and go. Whatever party that might be, we as an organization stand ready to work as we always do, build those relationships and work on what our policy and positions and issues are.”