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ASA economist: potential flaws for ag capital gains
American Soybean Association economist Scott Gerlt says the agriculture industry can’t be looked at the same way as others when it comes to capital gains tax.
Gerlt tells Brownfield agriculture is about three times more asset driven then the average company listed on the S&P 500.
“What that means is agriculture needs about three times the assets that stock market companies [need] to generate the same returns,” he said. “And capital gains is based off of that inflation, that’s pretty sizable.”
He said outside of a few coastal states, the Midwest would be impacted the most by removing the stepped-up basis with Iowa and Illinois leading the way at over $1,000 in capital gains tax per acre.
“If you’re in Illinois and you sell 100 acres, you could be looking at $100,000,” Gerlt said.
Gerlt said it would take about four years of rental income for most landowners to offset losses from the loss of the stepped-up basis.
