Bastards. Aside from the confiscatory, Marxist nature of this proposal, it ignores major parts of the rationale for the stepped-up basis.
1. Much of a typical “capital gain” is not a real gain in capital at all. It’s mere price inflation. Real property, for instance, may not have actually been improved in any way. It’s simply worth more because the Fed has devalued the dollar.
2. For some things like publicly traded stocks, it’s simple enough to calculate basis (i.e., it’s simply purchase price). But for a ton of other stuff, like real estate that has been improved over the course of decades, it’s damned near impossible to figure out how much capital has truly been invested in the place. Hence the stepped-up basis is a tool of simplification. When you’re trying to figure out the basis of grandma’s house that she bought 60 years ago, and remodeled, and expanded, and improved, it’s a hell of a lot easier, simpler and cleaner to just take the date-of-death value as the basis than to try to really calculate how much grandma invested in the place.
Everyone ought to be able to deduct inflation off of any gains and interest.