ABSTRACT Farm succession receives increasingly more national attention due to rising land prices and changes in tax policies. I provide a systematic evaluation of changes in capital gains and estate taxation policies influencing farmland owners' optimal selling behavior. The policy analysis provides two novel contributions: first, allowing heirs to keep or sell the farm upon inheritance, and second, analyzing four realistic policy scenarios including the proposed American Families Plan (2021) and adopted One Big Beautiful Bill Act. The results show that heirs' intentions to keep the farm exacerbate the “lock in” effect across policy scenarios, contributing to reduced farmland sales.
Alan Hinds (Wed,) studied this question.