House Democrats consider curtailing Biden’s inheritance tax plan

Ways and Means Chair mulls alternatives to ending “step-up in basis” tax provision

National /
May.May 20, 2021 12:46 PM
House Ways and Means Chair Richard Neal and President Joe Biden (Getty, iStock)

House Ways and Means Chair Richard Neal and President Joe Biden (Getty, iStock)

The Biden administration proposed dramatically expanding the inheritance tax on wealthy Americans. House Democrats are pumping the brakes.

Democratic lawmakers are discussing a range of alternatives that would weaken Biden’s ambitious plans for taxing estates’ capital gains, Bloomberg reported Wednesday.

In an effort to finance social programs as part of the president’s American Families Plan, the Biden administration has proposed ending “step-up in basis,” a provision which allows heirs to use the market value of assets at the time of inheritance — instead of their historical purchase price — as the cost basis for capital gains taxes.

Put another way, the stepped-up basis wipes out past taxable gains on inherited property, letting heirs start from scratch. Biden wants past gains taxed upon death, which in many cases would force the sale of inherited properties.

But on a Tuesday call with progressive groups and tax policy experts, staffers for House Ways and Means Chair Richard Neal suggested instead allowing beneficiaries to defer tax payments as long as they hold on to the asset, according to Bloomberg.

The House Democrats’ proposal would disincentivize beneficiaries of larger estates from selling, thus reducing the tax revenue underpinning Biden’s $1.8 trillion American Families Plan.

The nonpartisan Urban-Brookings Tax Policy Center estimates that Biden’s current plan for increasing capital gains taxes on the wealthy would generate $370 billion in federal revenue over 10 years. The plan is also intended to address inequality issues that arise when wealth is passed from generation to generation without any capital gains tax.

New Jersey Democrat Bill Pascrell, a member of the House Ways and Means Committee, calls the stepped-up basis a loophole that fuels wealth inequality. He has introduced a bill to make the inheritance tax bill due at the benefactor’s time of death.

A clear path won’t be revealed until a Treasury Department report detailing Biden’s tax plans is released in the coming weeks, Neal told Bloomberg.

[Bloomberg] — Cordilia James





    Related Articles

    arrow_forward_ios
    45 South Grove St in East Orange (Rendering via Progress Capital)
    Hero Construction lands $20M loan to build East Orange apartments
    Hero Construction lands $20M loan to build East Orange apartments
    Gov. Andrew Cuomo and Mayor Bill de Blasio (Getty, iStock)
    De Blasio bumps up city vouchers as state increase stalls
    De Blasio bumps up city vouchers as state increase stalls
    Donald Trump and the Trump International Hotel & Tower in Chicago (Getty, iStock)
    Donald Trump is owed $1M tax refund on Chicago skyscraper
    Donald Trump is owed $1M tax refund on Chicago skyscraper
    90 Morton Street and 212 West 18th Street (Photos via 90MortonSt and JDS)
    Walker Tower pad to sell at loss as Manhattan luxury market hits 7-month low
    Walker Tower pad to sell at loss as Manhattan luxury market hits 7-month low
    Rep. Alexandria Ocasio-Cortez, President Joe Biden and House Speaker Nancy Pelosi (Getty)
    Democrats urge Biden to extend eviction ban after House effort falls short
    Democrats urge Biden to extend eviction ban after House effort falls short
    Photo Illustration of Donald Trump (Illustration by Kevin Rebong for The Real Deal)
    Treasury Department must give Trump’s tax returns to Congress: DOJ
    Treasury Department must give Trump’s tax returns to Congress: DOJ
    Anderson Cooper is selling the apartment of his late mother Gloria Vanderbilt (Getty, Corcoran)
    Gloria Vanderbilt’s Beekman Place apartment lists for $1.1M
    Gloria Vanderbilt’s Beekman Place apartment lists for $1.1M
    Mayor Steven Fulop (Getty, iStock)
    Jersey City to provide up to $10K more rent relief per tenant
    Jersey City to provide up to $10K more rent relief per tenant
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...