Would Biden’s Estate Tax ‘Reform’ Make System Worse?

A progressive president is supposed to make our Tax Code more fair, right? So, Joe, why would your estate tax reform proposal “wipe out millions of small businesses” as outlined by Grover Norquist, president of American’s For Tax Reform?

If I might digress, I still recall 50 years ago when my progressive estate tax law professor told us students the entire tax system was a “bad joke” since it not only imposed a huge burden on workers when alive, but taxed them in their grave to boot. The prof thought the only sensible reform was to eliminate the estate tax, as President Biden would say, “period.”

Now, take “progressive” Biden’s brilliant estate tax idea. Please. As Mr. Norquist argued on a Fox News show, the proposal would not only “increase the death tax, but [it would also be] putting a second death tax [by] eliminating the stepped up basis at death”, i.e., the traditional accounting rule that mitigates the impact of passing property along to heirs by allowing the estate administrator to calculate a given property’s “cost” or “basis” for tax purposes at the time of transfer at death rather than when originally purchased by the decedent. The tax savings can be huge. Explained Mr. Norquist further, if more technically & in reverse: “So, [thanks to Joe] when somebody passes on a farm, a small business, a home to a son or daughter, they would have to pay the capital gains that had accumulated during their parents’ life & pay it immediately, not when they sell the house, not when they sell the business…” Clear as mud, Joe? To be fair, why not just throw the dang estate tax out with the dirty dishwater as my prof said?

Davd Soul