Iowans for Tax Relief Foundation released information Thursday on GOP presidential candidate Vivek Ramaswamy’s tax ideas, pointing out the pitfalls for Iowans and Americans and encouraging robust debate on tax policy during the Iowa Caucus process.
“As Iowans, we should take advantage of the numerous chances we have to meet the candidates and ask them where they stand on tax policy,” said Chris Ingstad, president of Iowans for Tax Relief Foundation. “Mr. Ramaswamy ought to remember that what might sound good to the media does not play so well here in the heartland.”
According to the foundation, Mr. Ramaswamy has been promoting the idea of eliminating stepped-up basis on inherited assets, including during a June interview with Michael Smerconish. Throughout 2021, U.S. Senator Chuck Grassley (R-Iowa) fought against proposals in Congress to eliminate stepped-up basis, calling it a death knell for family farms and small businesses.
Stepped-up basis means when calculating the capital gains tax, a beneficiary uses an asset’s value at the time of the owner’s death, not what the owner originally paid for it. In Iowa, that may look like a farmer who bought an average-sized farm of 350 acres in 1980. At $2,000 an acre, that farm was worth $700,000 when it was purchased. As the farmer worked hard for decades to make ends meet, paying property taxes and income taxes along the way, they likely did not accumulate a substantial amount of assets away from the farm itself. Given the appreciation of farmland over the past four decades, today that same farm is likely worth more than $11,000 per acre, or nearly $4 million in total. Without a stepped-up basis, that farmer’s children may easily owe more than $1 million in capital gains taxes if they choose to sell the farm they inherit.
“Iowans for Tax Relief Foundation understands how dangerous it is when government funds its unquenchable spending desires by looking beyond the grave for more revenue, whether that be through the capital gains tax, the estate tax, or the inheritance tax,” said Ingstad. “Iowans shouldn’t let bad policy ideas like eliminating the stepped-up basis take root.”
For 40 years, Iowans for Tax Relief Foundation has conducted research and provided facts about taxes, government spending, and regulation, and promoted the principles of limited government.