Thursday, January 29, 2015
The Daily Beast, Three Cheers for the Death Tax!, by Michael Tomasky:
Of all the Obama proposals unveiled in the State of the Union address, the one that’s probably drawn the most right-wing fire is the one that would close an inheritance capital-gains tax loophole. ... Undertaxing inherited wealth is ... immoral. ...
[T]he estate tax doesn’t start until $5.43 million per person or $10.86 million per couple. That’s high enough that only the wealthiest .15 percent of Americans pay any estate tax. Among the 3,780 U.S. households that owed any estate tax in 2013, their average tax rate was 16.6 percent.
Center for American Progress, Report of the Commission on Inclusive Prosperity (Jan. 15, 2015):
Combined with the United States’ generous estate tax structure, the step-up in basis rule creates very low effective tax rates on inherited wealth. The Congressional Budget Office estimates that the step-up in basis rule will reduce federal revenues by $644 billion over 10 years, with 21 percent of that subsidy going to the top 1 percent of income earners.
Step-up in basis is a particularly valuable subsidy for the wealthiest estates. A study published by the Federal Reserve [Robert B. Avery, Daniel Grodzicki & Kevin B. Moore, Estate vs. Capital Gains Taxation: An Evaluation of Prospective Policies for Taxing Wealth at the Time of Death (Federal Reserve Board, 2013)] estimates that unrealized capital gains comprise 55 percent of the total value of estates worth more than $100 million.