Stepped Up Basis Reform: Biden’s Middle-Class Tax Hike?
May 6, 2021 6:34 AM Taylor Tepper - Forbes Advisor
Posted:
Updated:
May 8, 2021 6:32 AM
President Joe Biden campaigned on a promise not to raise taxes on middle-class Americans. But a little-known provision in his big social programs bill could do just that.
Tucked away in the American Families Plan, is a proposal to change the way capital gains taxes are paid on estates when people pass away. This seemingly small revision to a tax rule called stepped up basis could cause average Americans to pay more to Uncle Sam than they would under the current tax regime, in addition to upending estate planning for the nation’s affluent and uber-wealthy.
Provided by Dow Jones
By Kate Davidson WASHINGTON Treasury Secretary Janet Yellen said Tuesday she is neither predicting nor recommending that the Federal Reserve raise interest rates as a result of President Biden s spending plans, walking back her comments earlier in the day that rates might need to rise to keep the economy from overheating. I don t think there s going to be an inflationary problem, but if there is, the Fed can be counted on to address it, Ms. Yellen, a former Fed chairwoman, said Tuesday at The Wall Street Journal s CEO Council Summit. Ms. Yellen suggested earlier Tuesday that the central bank might have to raise rates to keep the economy from overheating, if the Biden administration s roughly $4 trillion spending plans are enacted.
The Amazon.com Inc. founder s heirs may have to pay more than $36 billion.
Jeff Bezos has an ex-wife, a girlfriend, four children and billions of reasons to watch whether Joe Biden s tax overhaul wins congressional approval.
The Amazon.com Inc. founder s heirs may have to pay more than $36 billion if the president succeeds in closing a loophole that helps the rich transfer much of their fortunes tax-free at death.
Under current rules, whoever inherits the Amazon shares Bezos bought in 1994 for $10,000, worth $180 billion today, will receive a so-called step-up in basis, wiping out any capital gains tax liability. Biden s plan would close that loophole and apply the top capital gains tax immediately when assets transfer to wealthy heirs. If the rate increases it s 20% for holdings like Bezos s, and Biden has called for boosting it to 39.6% the eventual tax bill would too.
WHAT TO WATCH THIS WEEK
Republican Counterproposal. Senate Republicans are crafting a counter-proposal as an alternative to President Joe Biden’s American Jobs Plan (AJP). The package is expected to cost around $600 to $800 billion and consist only of “traditional” infrastructure projects like highways, roads and bridges. When exactly the proposal will be introduced is unclear, but its contents will continue to develop this week.
LATEST DEVELOPMENTS
White House Infrastructure Meeting. President Biden continued his push to gain support from lawmakers for his infrastructure proposal. Yesterday, he held the second in a series of meetings on the plan, this time with lawmakers that previously served as state or local government officials.