Tax experts slam Biden's mess of a 'double death' tax that will make bereaved families pay TWICE, wipe out value of inherited properties and 'crush' small businesses and farms - but it won't impact his Delaware homes

 The Biden administration's plan to hike the inheritance tax bill for wealthy Americans will snare the middle class, farmers and family businesses in a double taxation dragnet to finance its massive spending plans, according to tax experts.

President Joe Biden’s vast expansion of social spending programs will be funded in part by ending 'step-up in basis,' a provision which protects estates from capital gains tax at death.

Biden says the aim is to close a loophole that allows rich families to pass wealth from generation to generation.

But congressional Republicans warn it could have a devastating impact on family businesses, particularly farms, and Democrats have begun considering ways to limit the damage.

Chad Silver, attorney, said the rich would find new loopholes while the middle classes would get hit with bills on 'unrealized gains' - property and other assets that have risen in value.

President Biden's plans mean some families may face paying capital gains tax on estates to fund his massive spending proposals. At present, all but a few thousand are exempt

President Biden's plans mean some families may face paying capital gains tax on estates to fund his massive spending proposals. At present, all but a few thousand are exempt

Couple's will have a $2.5 million exemption, which means most families will escape the new charges, including the Bidens who are unlikely to face capital gains on assets largely made up of their two Delaware homes

Couple's will have a $2.5 million exemption, which means most families will escape the new charges, including the Bidens who are unlikely to face capital gains on assets largely made up of their two Delaware homes

The Bidens bought their home in Rehoboth Beach, Delaware, in 2017 for $2.7 million

The Bidens bought their home in Rehoboth Beach, Delaware, in 2017 for $2.7 million


'Taxpayers have already paid taxes on the money to acquire real property such as homes. It seems patently unfair to tax them twice on unrealized gains - once after they have earned the money and again after they have died,' he said.

'Wealthy people will figure out an end run around these proposals via trusts or other asset transfer vehicles.

'Middle class will get caught in the unrealized gain tax drag net because they do not have access to tax attorneys or CPAs who can help them plan around these taxes.'

To offset his spending plans, Biden wants to change the rules on how capital gains tax is imposed on estates. 

At present, the stepped up basis rule protects heirs to estates worth less than $11.7 million.

It allows them to inherit assets without paying capital gains tax on their value - or the unrealized gains.

So a mother can pass on her house to her children without them having to pay tax on its capital growth. They would only pay capital gains on its growth in value after they take ownership.

That would change with proposals outlined in the Treasury's green book last month, which sets out the administration's tax plans.   

'Under the proposal, the donor or deceased owner of an appreciated asset would realize a capital gain at the time of the transfer,' it said.

That means assets would now be taxed at Biden's proposed new higher effective capital gains tax rate of 40.8% at death.

So heirs would inherit an estate reduced by taxes.

The plan outlines allowance of $1.25 million for individuals and $2.5 million for couples.

That protects many estates - including that of the Bidens, whose main taxable assets are two houses, which are not believed to have appreciated by more than $2.5 million, according to a recent analysis published by the Wall Street Journal.

Andrew Moylan, executive vice president of the National Taxpayers Union Foundation, said making American pay tax for 'on paper' gains was fraught with administrative problems.

It also would fail to take account of inflation.

'It is clear that the Biden Administration is looking for huge amounts of new revenue, and as a result they're employing nearly every tax hike tactic in the book short of a new levy like a national VAT,' he said.

'Eliminating step-up-in-basis is just one component of that, but an important one.

'It does, in effect, re-establish the death tax in a pretty significant way for taxpayers that are not necessarily uber-rich.'

Analysts believe the proposals may amount to a moonshot wish list that can be negotiated down.

The issue has hit resistance among Democrats on Capitol Hill.

Staff for House Ways and Means Chair Richard Neal recently floated the idea of allowing beneficiaries to postpone paying the bill as long as they hang on to the asset, according to Bloomberg News.


Republicans are warning that family businesses and farms could be very badly affected.

Minority Senate Leader Mitch McConnell flagged the issue in April, when he said: 'The exemption would be lowered to a million dollars, which may sound like a lot of money to some people, but not if you’ve got a small business or a family farm.'

Officials say they will ensure that protections are in place.

'This reform will be designed with explicit protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run those businesses,” a senior official told reporters in an April briefing.

The Treasury's green book, setting out tax changes, offers further guidance suggesting tax on businesses would not have to be paid until it had been sold.

'Payment of tax on the appreciation of certain family-owned and -operated businesses would not be due until the interest in the business is sold or the business ceases to be family-owned and operated,' it said.

Republican senators from farming states have written to the Department of Agriculture seeking an explanation.

'As part of your explanation, please be sure to specify what special rules or exceptions you are assuming would exist for farm estates,' ask the senators, including John Boozman, ranking member of the committee on Agriculture, Chuck Grassley of Iowa, Tommy Tuberville of Alabama, and Joni Ernst of Iowa.

Tax experts slam Biden's mess of a 'double death' tax that will make bereaved families pay TWICE, wipe out value of inherited properties and 'crush' small businesses and farms - but it won't impact his Delaware homes Tax experts slam Biden's mess of a 'double death' tax that will make bereaved families pay TWICE, wipe out value of inherited properties and 'crush' small businesses and farms - but it won't impact his Delaware homes Reviewed by STATION GOSSIP on 07:57 Rating: 5

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