New Death Tax Would Squeeze the Life Out of Florida Citrus Growers

No industry is more synonymous with the great state of Florida than the citrus industry. Florida’s citrus growers, packers, and processors contribute more than $6.762 billion to our state’s economy, and we support more than 33,000 jobs.

We have endured countless hurricanes, droughts, pests, and diseases, and we continue in the fight of our lives against citrus greening. But there are massive, industry-killing tax increases coming out of Washington, DC, that could make Florida citrus just the latest American icon shipped overseas and lost to foreign competition.

Growers tend to be “land rich” and “cash poor.” Thus, when it’s time to swap one grove for another, often times they use what the Internal Revenue Code calls a “like-kind exchange.”

Like-kind exchanges permit a grower to sell land in Area A, and use all the money from the sale to buy land in Area B. There is no tax on the gains from the sale of Area A as long as all the money is reinvested into Area B. Eventually, if a grower does cash out and leave the industry, taxes will be owed on these exchanges.

That would all change under the new tax proposal introduced by President Biden. Growers could still make 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 capital gains tax. And under the current proposal, the long-term capital gains tax rate rises from 23.8% today all the way to 43.4%, a record high for the U.S. and one that would be the highest rate in the entire world.

As bad as this tax hike is for Florida citrus, the proposed changes to the estate tax are probably even worse.

Most people are familiar with the estate tax, better known as the death tax. The current proposal being discussed in Washington would create a second, double death tax on top of and in addition to the existing death tax. This second death tax would apply to anyone who dies with more than $1 million in unrealized gains, or tax for the profit you would make if you sold all your assets. That may sound like a lot of money, but remember that growers tend to be “land rich” and “cash poor.” The value of farmland in Florida has gone up tremendously over the years, but it’s not as if growers have benefited from that. Just like with stocks, real estate, or baseball cards, something is only valuable once you sell it.

Any unrealized gains over this $1 million amount would be subject to the new capital gains tax rate of 43.4%. This is true whether or not the land was sold and profits were made. They would owe the tax no matter what.

After paying this new death tax, the grower’s estate would then be subject to the old death tax, just like now. This tax upon tax upon tax would force citrus businesses to sell land, lay off employees, and take other draconian measures just to pay Uncle Sam. It’s hard enough to keep family farms going from generation to generation without the IRS tilting the scale.

But it is not as if citrus would be the only segment of Florida’s $122 billion dollar agriculture industry that would be impacted by the tax increases being proposed. That is why Florida Citrus Mutual, along with Florida Fruit and Vegetable Association, the Florida Cattlemen, Florida Farm Bureau, and others have led the charge to educate our elected leaders on the devastating impact these new taxes would have on citrus and production agriculture in Florida. It’s not an exaggeration to say if they pass these measures into law, the current generation will be the last generation to farm in Florida after taxes are counted and collected.

Comments 9

  1. With all do respect… it doesn’t surprise me. I must say am I the only grower who is about to explode regarding how much we can handle. We are doing our job by barely staying alive out here, can anyone else do theirs?

    Jim Gravley

  2. Will they be happy when they’ve taxed the food producers into oblivion and the US goes hungry and no one will export food to us?

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