I’m talking about the proposed repeal of the estate tax, which Trump and many Republicans have taken to calling the “death tax” even though it’s paid by only about 1 in every 500 estates. As opposed to the “millions of small businesses” that Trump claimed in his Wednesday speech would be helped by eliminating the tax.
death conveys a big advantage to the estates of the 99.8 percent of us (including me) who haven’t accumulated enough assets to be subject to the tax — an advantage that could shrink or disappear to help Trump and Congress accommodate the 0.2 percent.
The advantage: When we die, the “tax basis” — value for tax purposes — of assets we leave behind is marked up, tax-free, to their value on the day we died. So if you started your married life 40 or 50 years ago by buying a $27,000 house, traded up a few times and are leaving behind a house worth about $500,000, your inheritors can sell the house without having to pay capital gains tax or having to figure out what your tax basis in the house was.
This “tax-free step-up” also helps your heirs should you happen to leave behind, in a taxable account, stock that you bought 25 years ago and whose quarterly dividends you’ve been reinvesting for decades. Thanks to the tax-free step-up, your heirs don’t have to try to figure out how much you paid for each part of the holding.
So, you see, this provision of the tax code provides substantial breaks for the 99.8 percent. And these breaks might well be limited or even eliminated if the estate tax is repealed, to help cover the cost of eliminating the tax for the 5,000 to 6,000 estates a year that are subject to it
https://www.washingtonpost.com/busi...41773cd5a14_story.html?utm_term=.26d09dfbfb7b
death conveys a big advantage to the estates of the 99.8 percent of us (including me) who haven’t accumulated enough assets to be subject to the tax — an advantage that could shrink or disappear to help Trump and Congress accommodate the 0.2 percent.
The advantage: When we die, the “tax basis” — value for tax purposes — of assets we leave behind is marked up, tax-free, to their value on the day we died. So if you started your married life 40 or 50 years ago by buying a $27,000 house, traded up a few times and are leaving behind a house worth about $500,000, your inheritors can sell the house without having to pay capital gains tax or having to figure out what your tax basis in the house was.
This “tax-free step-up” also helps your heirs should you happen to leave behind, in a taxable account, stock that you bought 25 years ago and whose quarterly dividends you’ve been reinvesting for decades. Thanks to the tax-free step-up, your heirs don’t have to try to figure out how much you paid for each part of the holding.
So, you see, this provision of the tax code provides substantial breaks for the 99.8 percent. And these breaks might well be limited or even eliminated if the estate tax is repealed, to help cover the cost of eliminating the tax for the 5,000 to 6,000 estates a year that are subject to it
https://www.washingtonpost.com/busi...41773cd5a14_story.html?utm_term=.26d09dfbfb7b
