Bloink: Current proposals for eliminating the step-up in basis are really only proposals to limit the availability of the loophole. In reality, the proposals would exempt some assets — perhaps up to $1 million per individual — from the new rule, so that the middle class would not be harmed by otherwise eliminating the stepped-up basis rules. The tax revenue would be used to fund paid leave, child care and education — areas that are in desperate need of funding because the super-rich in this country have so many options to avoid paying their fair share.
Byrnes: This is a tax hike that would make investment in the economy more expensive for the business owners who keep America running. It would seriously hurt farmers, ranchers and others who pass family businesses on to the next generation. Even worse? It would result in a situation where these assets are subject to double taxation if those same assets are subject to the estate tax and the capital gains tax — not to mention the administrative nightmare for taxpayers who would have to determine the original cost basis of these assets upon inheritance.
Bloink: Biden’s proposal also plans to exempt family farms and small family businesses —meaning that as long as the heir continues to run the business, they should be able to continue benefiting from the stepped-up basis rules. The proposed rules are only meant to prevent situations where immense wealth is passed from generation to generation without any tax liability — giving wealthy heirs yet another opportunity to sell valuable assets without paying their fair share of capital gains tax.
Byrnes: The odds of this plan passing are slim to none. The fact is, even some Democrats oppose Biden’s large-scale tax hike plan — and moderate Republicans will never support eliminating the stepped-up basis rules, let alone his proposed capital gains tax hikes that would magnify the negative impact of the changes.
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