TaxConnections thanks the Westerm Journal for their permission to post this article written by Eric Nanneman.
For many moderate Americans who were afraid of voting for a traditional tax-and-spend Democrat, this assurance may have tipped the balance to win their vote.
But as Biden unveiled his American Families Plan — which promises two years of free community college education, 12 weeks of paid family and medical leave, expanded unemployment benefits and more — there was an ugly truth hidden near the bottom.
Death Tax’ Greatly Expanded
Currently, the estate tax exemption stands at $11.7 million, meaning that when an owner of an estate passes away, the heirs are only taxed on the amount exceeding $11.7 million, or $23.4 million for couples. So, if an unmarried son inherits a $20 million estate, he would pay taxes on $8.3 million.
Biden’s drastic plan cuts the $11.7 million exemption all the way down to $1 million.
The White House reported that “The President’s plan will close this [loophole that allows the wealthiest Americans to entirely escape tax on their wealth by passing it down to heir], ending the practice of ‘stepping-up’ the basis for gains in excess of $1 million ($2.5 million per couple when combined with existing real estate exemptions) and making sure the gains are taxed.”
Essentially, for homes worth more than $1 million, unmarried heirs would be on the hook for 39.6 percent federal tax — regardless of their annual income.
Article Continues At This Link To Western Journal
1 comment on “Biden’s ‘Death Tax’ Will Harm Middle-Class Families Making Far Less Than $400K A Year”
Whether I agree with the sentiment of the writer or not, I expect such an article whether right leaning or left leaning to be written honestly. This one is not.
He states “Essentially, for homes worth more than $1 million, unmarried heirs would be on the hook for 39.6 percent federal tax — regardless of their annual income.” This is not what the Administration has proposed.
The proposal is to tax GAINS above $1m for a single filer, $2m for couples, plus the existing $500k exemption – so $2.5 in all.
So. if a house cost $1m, and has a value of $2m when the estate is determined, a single heir pays no tax on the gain. On the same property, an inheriting couple would not be taxed on a value at estate time of $3m.
He makes no mention of the application of marginal tax rates to the taxable value of an estate, instead stating that “Essentially, for homes worth more than $1 million, unmarried heirs would be on the hook for 39.6 percent federal tax — regardless of their annual income.” For that to be true the home has a basis of zero.
We may still disagree with these thresholds, and that’s fine. But the writer told us a different story, and that is not OK. Such is the state “spin” in modern world from both ends of the political spectrum.
There are aspects of the proposal that should attract criticism and debate. For example, aside from the proposed thresholds, is filing status an appropriate reason for doubling, or halving, an estate tax exemption? But if we want credibility we also need honesty – not biased spin.
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