Many Americans of modest means would be forced to sell assets to pay Biden’s death tax
(Art More) President Biden continues to promise he will not raise taxes on anyone earning less than $400,000, but an analysis of his proposed revision to the way capital gains taxes are paid on estates when people die shows otherwise.
Buried in his American Families Plan is a “middle-class death tax” that would penalize people of modest means, such as a widow with nothing but a home to pass on to her children, according to an analysis published by the Wall Street Journal and reported by DailyMail.com.
Meanwhile, the proposed changes would leave untouched Joe and Jill Bidens’ personal fortune, currently valued at $8 million, according to Forbes.
“The American Families Plan as proposed would impose a new death tax that would punish middle class individuals who chose to invest in America and leave something for their children rather than spend every dollar,” said Hank Adler, associate professor at Chapman University and co-author of the study.
“The plan does not move the goal posts, it totally changes the rules of the game.”
Currently, capital gains tax generally is imposed on profits when assets are sold. Only estates worth more than $11.7 million are taxed on “unrealized gains,” meaning the increase in value of assets, even if they are not sold.
But Biden wants to close what he calls the “trust fund loophold,” reducing the threshold to $1 million.
However, the analysis by Adler and California attorney Madison Spach, shows how the heirs of a young widow who bought a home for $250,000 decades ago could be hit with a massive tax bill upon her death.
In contrast, the heirs of the Bidens, who own two homes, would pay nothing.
If the widow’s house were now worth $2.5 million, under the current law there would be no capital gains tax on the estate.
But under Biden’s proposals, there would be a tax on the increase in value, less an exemption of $1.25 million. At a tax rate of 40.8% on the remaining $1 million, the tax bill would be $408,000.
But for the Bidens, who along with their two homes have annuities and life insurance policies, the total appreciation on their homes would be less than the couples’ exemption of $2.5 million.
Their estate would pay nothing.
“Scenarios in which the new death tax would significantly reduce, nearly eliminate or even totally eliminate the net worth of decedents who invested and held real estate for decades wouldn’t be uncommon,” the authors of the study write.
Read My Lips
On his campaign website, Biden declared: “Joe Biden will not raise taxes on anyone making less than $400,000. Period.”
After assuming office, he told “Good Morning America” that anyone “making more than $400,000 will see a small to a significant tax increase.”
But if you make less than $400,000, Biden said, “you won’t see one single penny in additional federal tax.”
However, as columnist Veronique de Rugy pointed out, press secretary Jen Psaki told reporters the threshold of $400,000 refers to family income.
She contradicted herself a few days later.
“The president remains committed to his pledge from the campaign that nobody making under $400,000 a year will have their taxes increased,” she said.
In any case, de Rugy noted, Biden wants to raise the corporate income tax from 21% to 28%, a burden that historically falls on corporations’ workers and shareholders, many of whom earn much less than $400,000 a year.
“Workers might not personally be sending more or bigger checks to the IRS, but they will still suffer higher taxation in the form of lower wages, as well as higher prices for consumer goods and services,” de Rugy wrote.
Biden already has spent $1.9 trillion and proposes another $4 trillion on “infrastructure” spending. Economists point out that the inflation fueled by the combination of deficit spending and printing more money puts as much of a squeeze on American workers as a tax increase.