For decades, the Democrat “death tax” has been greatly frowned upon by Republicans and the American people. Most Americans hate the concept of taxing someone’s wealth after they have died however this has not stopped Democrats from gouging money from a deceased person’s family.
National Review reports that the death tax has dropped from 55% to 40% this century however it now appears that the Biden administration wants more.
You heard that right: The Biden administration wants to tax you or your loved one’s dead body.
Read the report from the National Review below:
Yet now, the “norms restoring” Biden administration is attempting to double down, by creating a new, parallel death tax to go alongside the old one no one likes.
The Biden administration proposes that on top of the old death tax, which is assessed on estates, the federal government should add a new tax on the deceased’s last 1040 personal-income-tax return. This new, second tax would apply to tens of millions of Americans.
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Under the administration’s plan, the year someone died, all of their unrealized capital gains (gains on unsold real estate, family farms and businesses, stocks and other investments, artwork, collectibles, etc.) would be subject to taxation as if the assets in question had been sold that year. The first $1 million of unrealized gains ($2 million in the case of a married couple) would be exempt from the new tax. In addition, up to a certain point ($500,000 for a married couple, half that for others), gains derived from the sale of a primary residence would be exempted. Finally, the administration has said in the vaguest terms that “going concerns” in family farms and businesses would be exempt, but no one knows how that would work or believes it’s anything more than politically expedient hand-waving.
In short, what the Biden administration is proposing is to tax the capital gains on a person’s property when they die, even if the assets that account for those gains haven’t actually been sold. By itself, this is deeply unfair, because potential income from a house or a stock is not real income one owes taxes on until a sale happens and one has cash in hand. (You don’t pay income tax on the growth in your home’s value every year, for example.) But to make matters worse, the administration also supports raising the top tax rate on long-term capital gains from 23.8 percent to 43.4 percent. When state capital-gains-tax rates are factored in, this would make the combined rate at or above 50 percent in many places — the highest capital-gains-tax rate in the world, and the highest in American history.
And that’s not all. After these unrealized, unsold, phantom gains are subject to the new 50 percent double death tax, there is still the matter of the old death tax to deal with. Imagine a 50 percent death tax followed by a 40 percent death tax on what is left, and you get the idea. Karl Marx called for the confiscation of wealth at death, but even he probably never dreamed this big.
It goes without saying that this 50 percent double death tax would apply to all capital gains over the exclusion amount, including those derived merely from inflation. A middle-class family who bought a vacation home in 1980 for $100,000 and has seen its value rise to $500,000 today knows that a lot of that growth is due to inflation alone. In fact, adjusting for inflation would reduce the gain in this example from $400,000 to just $150,000. Both the old and the new death taxes will tax merely phantom inflation gains.
And how, exactly, are family farms and businesses supposed to handle this? Should they assess the enterprise value of a company that isn’t publicly traded and valued? Should the land-rich, cash-poor farmer be punished for keeping a 100-year-old family business going? Will factories and farm plots have to be sold off, or employees laid off, to pay this new tax? Just like the old death tax, the double death tax would be a dream for the estate-planning industry, armies of actuaries and attorneys, and other tax professionals. But for the average American, it would be a nightmare.
The death tax we have is bad enough. A second death tax would be a catastrophic mistake.
What are your thoughts? Let us know in the comments below!