With all the activity going on in Washington right now, it is very difficult to keep track of what policies are being changed from one day to the next. In trying to read and keep up with this activity, one proposed change has particularly caught our attention, and it is one that we think should capture the attention of many citizens of this county. There is talk of a potential two-fold change in capital gains taxes.
A capital gains tax is a tax paid on the growth in value of investments incurred when individuals and corporations sell those investments. The first impact of this potential change, and likely the most significant, involves when taxes would be paid on inherited land. Currently, taxes are not paid on inherited land until it is sold by the person that inherited it. Under a proposed new plan, taxes would be paid at the time the capital is transferred, i.e. at the time of inheritance in this case. This means taxes would be due upon inheritance, even if the land remains in the family and is never intended to be sold.
The second aspect of these proposed changes involves the elimination of a “stepped-up basis” for property transfers. Basically, the basis is the “starting point” for determining taxable gains on capital property or land. Currently, when land is inherited, the basis becomes the value of the land upon inheritance, and taxes are assessed on any gains from that point. The proposed taxation plan would use the original purchase price as the basis. Therefore, property that was purchased years (or generations) ago would be taxed on the gains from initial purchase until the present. It is easy to calculate what financial impact this would have on people who inherit property, especially family property that has remained in the family for multiple generations.
These changes would be very impactful to many people; in particular, family farms are certain to suffer. A simple Google search of this topic yields numerous articles predicting the dire consequences of this action on family farms across the nation. In Botetourt County, we have numerous multi-generational farms. If these ideas were to become policy, many of these farms may end up being sold just to pay the taxes. This would cause the loss of much of our farmland, the loss of a valuable food and fiber supply, the loss of valuable agribusinesses and the loss of what makes our county the county we love.
Our family farms, local and nationwide, represent of part of our culture that is vital to our workforce and to the success of our communities. Think about the impact of family farms on our life in Botetourt. Among many other things, these farms provide Botetourt County with the sunflower festival, many other fall festivals, concerts, tractor pulls, vineyards, the opportunity to buy local foods at farmers markets and store fronts, and the opportunity to educate our children about agriculture.
Further, these farmlands provide valued greenspace and the vegetation on this land is very important in carbon fixation. This type of change in taxation could destroy that way of life and these local environmental treasures. In a time when we value diversity more than ever, we must work to preserve our diverse way of life.
If you are concerned by these potential changes, we urge you to contact your legislators in Washington and encourage them to vote against these types of changes in taxation policies, should they be formally proposed. Our legislators are Representative Ben Cline and Senators Mark Warner and Tim Kaine. The future of our Botetourt County family farms may very well depend on the actions of all of us.
Amy White, Buchanan
Kate Lawrence, Buchanan