{"id":224762,"date":"2021-04-12T12:06:00","date_gmt":"2021-04-12T09:06:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/"},"modified":"2021-04-12T12:06:00","modified_gmt":"2021-04-12T09:06:00","slug":"how-much-could-proposed-estate-tax-changes-affect-you-and-your-family","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/","title":{"rendered":"#\n  How much could proposed estate tax changes affect you and your family?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a415ae4ddb79\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a415ae4ddb79\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/#Two_ways_Congress_and_the_Biden_administration_want_to_alter_the_%E2%80%98death_tax\" >Two ways Congress and the Biden administration want to alter the \u2018death tax\u2019<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/#Lowering_the_estate_tax_exemption\" >Lowering the estate tax exemption<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/#Changing_the_%E2%80%9Cstepped_up%E2%80%9D_basis_rules_at_death\" >Changing the \u201cstepped up\u201d basis rules at death<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/#No_sure_thing\" >No sure thing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/#The_history_of_estate_taxes\" >The history of estate taxes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/#Democratic_estate-tax_reform_bills_in_Congress\" >Democratic estate-tax reform bills in Congress<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/#Opposition_to_estate_taxes\" >Opposition to estate taxes<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/buradabiliyorum.com\/en\/how-much-could-proposed-estate-tax-changes-affect-you-and-your-family\/#Chris_Farrell\" >Chris Farrell<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  How much could proposed estate tax changes affect you and your family?<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Two_ways_Congress_and_the_Biden_administration_want_to_alter_the_%E2%80%98death_tax\"><\/span>\n  Two ways Congress and the Biden administration want to alter the \u2018death tax\u2019<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div class=\"cx--next\">\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000227028\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       <em>This article is reprinted by permission from\u00a0<\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.nextavenue.org\/\" class=\"icon none\"><em>NextAvenue.org<\/em><\/a><em>.<\/em><\/p>\n<p> You\u2019ve probably been hearing about how the Biden administration wants to raise the 21% corporate tax rate and the 37% top income-tax rate and 20% capital-gains rate for the wealthiest Americans. But changes in the estate tax rules, under consideration by the president and Congress, haven\u2019t received as much attention. They could, however, affect you and your family.<\/p>\n<div class=\"paywall\">\n<p>There are two proposals to alter the way taxes are imposed on estates at death you\u2019ll want to know about.<\/p>\n<p>The first is the federal\u00a0estate tax\u00a0exemption.<\/p>\n<p>Since 2018, estates are only taxed once they exceed $11.7 million for individuals; $23.4 million for married couples, at a top rate of 40%. (The value of a primary home is exempted up to $250,000 for individuals and $500,000 for married couples.) The estate tax gets levied on property, including cash, real estate, stocks and other assets transferred at death to heirs.<\/p>\n<p><strong>Learn<\/strong> <strong>more<\/strong>: Inheriting a house? Read this before you make any rash decisions<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Lowering_the_estate_tax_exemption\"><\/span><strong>Lowering the estate tax exemption<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>The Biden campaign proposed reducing the estate tax exemption to $3.5 million per person ($7 million for a married couple), which is what it was in 2009, while increasing the top rate to 45%.<\/p>\n<p>With the current $11.7 million threshold, very few Americans ever have to deal with the estate tax. The Urban-Brookings Tax Policy Center estimates that only about 4,000 individuals dying in 2018 left estates large enough to require filing an estate tax return. After allowing for deductions and credits, a mere 1,900 estates owed the tax. Considering the sophisticated tax avoidance techniques available to the really rich, the estate tax has essentially become a tax on plutocrats.<\/p>\n<p>The second possible change is about the treatment of capital gains at death.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Changing_the_%E2%80%9Cstepped_up%E2%80%9D_basis_rules_at_death\"><\/span><strong>Changing the \u201cstepped up\u201d basis rules at death<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>A capital gain occurs when an asset is sold for a higher price than its purchase price, known as its \u201cbasis.\u201d When you inherit an asset, under current law, the \u201cbasis\u201d is its value at the time of the owner\u2019s death. That\u2019s called \u2014 pardon the tax jargon \u2014 the \u201cstepped-up basis.\u201d<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>So, today, when someone dies, capital gains are only taxed once the heir sells the asset at a profit based on the value of the asset when he or she received it (not what the original owner paid).<\/p>\n<p>Here\u2019s a simplified illustration. Your mother bought stock for $10 a share in 1990 and the stock was worth $200 a share at her death in 2018. You inherit the stock without paying any capital gain and sell the stock this month at $400 a share. You\u2019ll only owe capital-gains taxes on the difference between $200 and $400.<\/p>\n<p>Now, here\u2019s how things could change: Biden said during the campaign that he wanted to tax unrealized capital gains at death, regardless of whether the heirs sell the asset at that time. Put another way, if this proposal takes effect, the \u201cstepped-up basis\u201d rules would end and heirs would owe taxes based on the difference between what the deceased originally paid and the value at his or her death.<\/p>\n<p><strong>Also see:<\/strong> Homeowners are facing the biggest property-tax hikes in 4 years \u2014 here\u2019s where they pay the most<\/p>\n<h6><span class=\"ez-toc-section\" id=\"No_sure_thing\"><\/span><strong>No sure thing<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>To be sure, neither of these proposals are guaranteed to become law. In fact, Republicans on Capitol Hill aren\u2019t keen to hike estate taxes. That\u2019s not just because they\u2019re united against higher taxes. It\u2019s also because many have tried to eliminate estate taxes over the years.<\/p>\n<p>\u201cThe politics of the estate tax is hard, especially given the nature of the Senate,\u201d says Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute. Adds William Gale, senior fellow in the Economic Studies Program at the Brookings Institution: \u201cPeople who don\u2019t like the estate tax don\u2019t like it if you turn it into an inheritance tax. They just don\u2019t want to pay the tax.\u201d<\/p>\n<p>That said, the Democrats control both houses of Congress and the White House and Washington is looking for ways to raise revenue due to the ballooning budget deficit.<\/p>\n<p><strong>Read<\/strong>: Republicans and Democrats are split over whether estate and income taxes are \u2018unfair\u2019<\/p>\n<p>Taxes tied to death have a long history, dating at least to 7th\u00a0century B.C. in Egypt.<\/p>\n<p>\u201cHonestly, people have been trying to tax death or tax events around death about as long as they\u2019ve been taxing anything,\u201d said tax historian Joseph Thorndike in a podcast interview with David Stewart, editor in chief of Tax Notes Today International.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"The_history_of_estate_taxes\"><\/span><strong>The history of estate taxes<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>In the U.S., he added, in the early years of the death tax, it was \u201c a war tax.\u201d From 1797 to 1802, it helped pay for the Quasi-War with France. A stamp duty was put on inventories of deceased persons, receipts of legacies, shares of personal estate and probates of wills to help pay for America\u2019s naval forces.<\/p>\n<p>The U.S. government imposed an inheritance tax during the Civil War and then repealed it in 1870. And the first federal estate tax came about in 1898 to pay for the Spanish-American War; it was abolished in 1902.<\/p>\n<p>The modern estate tax became permanent in 1916. In many respects, it\u2019s similar to today\u2019s.\u00a0<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Democratic_estate-tax_reform_bills_in_Congress\"><\/span><strong>Democratic estate-tax reform bills in Congress<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>The outlines of the current estate tax debate are becoming (somewhat) clear.<\/p>\n<p>Take a recent proposal by Democratic Senators Kirsten Gillibrand (N.Y.), Sheldon Whitehouse (R.I.), Chris Van Hollen (Md.), Jack Reed (R.I.) and Bernie Sanders (Vt.). They\u2019re behind the \u201cFor the 99.5% Act.\u201d (Democratic Rep. Jimmy Gomez (Calif.) has introduced a similar bill in the House).<\/p>\n<p>Said Van Hollen in a statement: \u201cThe stepped-up basis loophole is one of the biggest tax breaks on the books, providing an unfair advantage to the wealthiest heirs every year.\u201d<\/p>\n<p>This legislation would lower the estate tax exemption to $3.5 million for individuals and $7 million for married couples at a 45% rate and gradually increase the rate to 65% for estates worth $1 billion or more.<\/p>\n<p>A separate proposal sponsored by progressive Democratic Senators Van Hollen, Cory Booker (N.J.), Sanders, Elizabeth Warren (Mass.) and the Whitehouse \u2014 along with a similar bill from Rep. Bill Pascrell (D-N.J.) would exempt the first $1 million from capital-gains tax at death (indexed to inflation). Any value greater than that would be considered a capital gain. Farmers and small businesses could pay the tax in installments over 15 years; Pascrell\u2019s bill has a seven-year installment plan. (This bill wouldn\u2019t change the exclusion for primary homes up to the current limit.)<\/p>\n<p>The politics of designing the stepped-up basis this way is to defuse political and voter opposition by ensuring that middle class people don\u2019t pay the tax at death.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Opposition_to_estate_taxes\"><\/span><strong>Opposition to estate taxes<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>For most of the estate tax\u2019s history, it has been controversial, largely because the tax involves critical value judgments about society and the economy.<\/p>\n<p>Many wealthy families oppose the tax. They\u2019ve successfully harnessed opposition to it over the decades, with studies showing that the estate tax discourages entrepreneurship, family businesses, wealth accumulation and savings.<\/p>\n<p>Polling data shows that even people who would likely never owe the tax often recoil at the notion of the Internal Revenue Service imposing a \u201cdeath tax\u201d (or, even more colorfully, the \u201cgrave robbers\u2019 tax\u201d and \u201cgrim reaper\u2019s reward.\u201d)<\/p>\n<p>A cottage industry of professional advisers has grown to help the rich avoid the tax, too. (If you\u2019d like to see how complicated estate tax planning is, check out the slides about proposed changes from a recent\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/gassmanlaw.com\/wp-content\/uploads\/2021\/04\/4.3.21-slides.pdf\" class=\"icon none\">presentation by attorney Alan Gassman<\/a>.)<\/p>\n<p>Proponents of estate tax changes, however, believe the economic criticisms never really hold up to close scrutiny. More important, they say, the tax itself is designed \u2014 however flawed \u2014 to lean against accumulated economic privilege and inequality.<\/p>\n<p><strong>More<\/strong>: How do I reduce the taxes on my estate?<\/p>\n<p>Simplifying the estate tax could put an end to many loopholes and complicated tax-avoidance strategies. Still, in the end, the estate tax is really a national debate about ethics and morality.<\/p>\n<p><em>Chris Farrell\u00a0is senior economics contributor for American Public <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Media<\/a>\u2019s Marketplace. An award-winning journalist, he is author<br \/>\u00a0of \u201cPurpose and a Paycheck: Finding Meaning, Money and H<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>iness in the Second Half of Life\u201d and \u201cUnretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life.<\/em>\u201d<\/p>\n<p><em>This article is reprinted by permission from\u00a0<\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.nextavenue.org\/\" class=\"icon none\"><em>NextAvenue.org<\/em><\/a><em>, \u00a9 2021 Twin Cities Public Television, Inc. All rights reserved.<\/em><\/p>\n<p><strong>More from Next Avenue:<\/strong><\/p>\n<ul class=\"articleList\">\n<li>\n      <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nextavenue.org\/tax-tips-for-filing-your-2020-return\/\" class=\"icon none\">Tax Tips for Filing Your 2020 Return<\/a><\/p>\n<\/li>\n<li>\n      <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nextavenue.org\/estate-planning-basics-you-need-to-know\/\" class=\"icon none\">Estate Planning Basics You Need to Know<\/a><\/p>\n<\/li>\n<li>\n      <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nextavenue.org\/why-you-need-a-digital-estate-plan-and-how-to-make-one\/\" class=\"icon none\">Why You Need a Digital Estate Plan and How to Make One<\/a><\/p>\n<\/li>\n<\/ul>\n<\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Chris Farrell\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Chris_Farrell\"><\/span>Chris Farrell<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B21005575-02D4-D4B5-4572-D376D41C584D%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# How much could proposed estate tax changes affect you and your family? &#8221; Two ways Congress and the Biden administration want to alter the \u2018death tax\u2019 This article is reprinted by permission from\u00a0NextAvenue.org. You\u2019ve probably been hearing about how the Biden administration wants to raise the 21% corporate tax rate and the 37% top&#8230;<\/p>\n","protected":false},"author":1,"featured_media":224763,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-224762","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/224762","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=224762"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/224762\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/224763"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=224762"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=224762"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=224762"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}