House panel approves $66 billion ag bill; change in ‘stepped-up basis’ is abandoned
The Democratic-controlled House Agriculture Committee approved its $66 billion part of President Biden’s $3.5 trillion “build back better” bill on a party-line vote Monday, with Chairman David Scott saying he was confident that $28 billion will be added later for land stewardship and climate mitigation by farmers. Meanwhile, House Democrats said they would not alter a tax break that helps farmers pass land from generation to generation.
Farm groups had adamantly opposed any change in “stepped-up basis,” which reduces liability for capital gains taxes on inherited property. In April, President Biden proposed stricter application of the capital gains tax with a focus on millionaires. He said the proposal would not increase taxes on heirs who keep the family farm running.
All the same, the proposal became a political lightning rod, potentially endangering passage of the so-called reconciliation bill in the narrowly divided House, and was omitted from the package of tax increases proposed by the Ways and Means Committee to help pay for the bill. The committee was to vote on its part of “build back better” on Tuesday and Wednesday.
The Agriculture Committee cleared its $66 billion expansion of forestry, rural economic development, and agricultural research on a 27-24 roll call. Republicans said the bill was incomplete without the money for conservation. Scott said he was working with the House Budget Committee to obtain the funds. “But right now it’s in the works, and we feel very confident,” he said.
“For many of us who care about the conservation title, that will determine how we vote on the final package” on the House floor, said Rep. Jim Costa, a California Democrat.
Republican Austin Scott of Georgia said, “I cannot find where production agriculture gets one penny of this $96 billion.” Other Republicans said Democrats had ignored the farm sector.
Before clearing the $66 billion package, the committee defeated more than two dozen Republican amendments, mostly on 24-27 votes.
The package includes $14 billion for the treatment of hazardous fuels in national forests and adjoining land; $9 billion for forest restoration; $2.25 billion for the Civilian Climate Corps; $10 billion to help rural communities and rural electric cooperatives transition to renewable energy; $1 billion for the Biofuels Infrastructure Program; and $2.6 billion for grants and loans through the Rural Energy for America Program to improve the energy efficiency of their operations.
Along with finding revenue to offset the cost of the reconciliation bill, the Ways and Means Committee proposed extending the $1-a-gallon biodiesel tax credit and creating a $1.25-a-gallon tax credit for sustainable aviation fuel that reduces emissions by at least 50%. It also would provide tax breaks for the purchase of electric vehicles.
Biofuel and farm groups said the standards for the sustainable aviation fuel credit were based on outdated analyses that would exclude U.S. biofuels. “It fails to accurately account for on-farm carbon reduction activities as well as production and efficiency improvements in biofuel production,” said the groups in a letter to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer.
For details of the House Agriculture bill or to watch a video of its hearing, click here.
A section-by-section analysis of the tax proposals by the Ways and Means Committee is available here.