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(Battle over Reconciliation) Republicans waging war against President Biden's proposed tax increases are increasingly focusing their opposition on one floated change to capital gains.
https://www.thewealthadvisor.com ^ | July 28, 2021

Posted on 08/01/2021 3:17:16 AM PDT by 11th_VA

Biden has called for taxing capital gains at death as a way to raise taxes on the wealthy and help pay for his social spending proposals. GOP lawmakers, along with business groups and conservative organizations, argue such a move would hurt family-owned businesses and farms…

Currently, capital gains are not taxed at death. Additionally, when heirs sell an asset, they have to pay capital gains taxes on the difference between the value of the asset when it was sold and the value of the asset when they received it, not on the difference between the value of the asset when it was sold and the value of the asset when it was initially purchased. This concept is known as “stepped-up basis.”

Biden is proposing to end stepped-up basis for capital gains in excess of $1 million per person and tax those gains at death.

The administration is seeking to prevent owners of family businesses and farms from being hurt by the proposal by providing that taxes on the appreciation of these businesses would not have to be paid until they are sold or stop being family owned and operated…

A group of 13 House Democrats from rural districts, including Rep. Cindy Axne (Iowa), wrote a letter in May to the party's leaders in the chamber urging them to include exemptions for family farms and small businesses in legislation based on Biden’s plans.

Additionally, House Agriculture Committee Chairman David Scott (D-Ga.) wrote a letter to Biden last month expressing concerns that the president’s proposed protections for family farms “could still result in significant tax burdens on many family farming operations.”

Republicans see the letters as a sign that their arguments against Biden’s proposal could resonate with Democrats…

(Excerpt) Read more at thewealthadvisor.com ...


TOPICS: Extended News; News/Current Events; Politics/Elections
KEYWORDS: biden; bidenomics
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This is Gettysburg in the reconciliation bill …
1 posted on 08/01/2021 3:17:16 AM PDT by 11th_VA
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To: 11th_VA

This is demonic anti-American administration.


2 posted on 08/01/2021 3:45:14 AM PDT by jacknhoo ( Luke 12:51; Think ye, that I am come to give peace on earth? I tell you, no; but separation. )
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To: 11th_VA

this type of taxation is reason why we have equal number of Senators from each state, if not the larger metropolitan cities and states would dominate the legislature and pass this type of tax, ruining small businesses and farmers without a 2nd thought...


3 posted on 08/01/2021 3:52:36 AM PDT by srmanuel (`)
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To: 11th_VA

I am pretty anti-tax and ant-big government spending, but in this case - depending on how it is written - it is not necessarily bad.

If I bought apple stock 30 years ago for $1,000, and now it is worth $10 million instead, I would have a huge tax bill if I need to sell it to live on.

But if instead of selling it, I die with it and leave it to my kids, then they sell it for $10,000,005 dollars, they would only have to pay taxes on the 5 dollar gain.

Somehow that doesn’t seem rational - either no one should have to pay taxes on that $10M gain, or everyone should - allowing a small minority of folks to avoid taxes on millions or dollars in gains, by using the stepped up basis, but punishing regular folks who need to cash out their investments in retirement to live on seems to favor the extreme wealthy over the moderate wealthy.

Either write the law so nobody pays capital gains, or everyone pays the same way seems fair to me. Not sure people who have just enough capital gains to live out their lives in retirement should be footing the bill so that the bezo’s of the world can build family wealth dynasties by passing on never-taxed wealth for generations.


4 posted on 08/01/2021 3:55:42 AM PDT by qwerty1234
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To: 11th_VA

Bullshit! The Republicans are not waging war on anything but Trump supporters. On these they are going all out. As far as the Democrats go, all the Republicans are doing to them is kissing their ass and abetting them destroy America.


5 posted on 08/01/2021 4:01:02 AM PDT by sport
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To: 11th_VA

The wealthy shouldn’t have carried so much water for the left. Take it all.


6 posted on 08/01/2021 4:10:00 AM PDT by nonliberal (Trump 2024. Burn it down.)
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To: 11th_VA

Really? Thats the only thing they can fight them on?

Every line should be contested...Yes, I understand they want to peel off support here and there but come on..


7 posted on 08/01/2021 4:13:17 AM PDT by Adder ("Can you be more stupid?" is a question, not a challenge.)
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To: 11th_VA

Hey Joe, how about raising taxes on no talent painters who are prodiginy of no ethics politicians?


8 posted on 08/01/2021 4:19:33 AM PDT by dblshot
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To: qwerty1234

What about all the thousands of dollars worth of stocks you bought during your life that went down or the company folded? You lost money on all of those, in some cases everything you invested. Should your heirs get to figure up that total and subtract it from your estate? The stock market is a risk, starting a small business is a risk, running a family farm is a risk. Some people are willing take the risk others are not. Some are successful, some are not. So in your world if someone takes a risk, invests, works hard and is successful, when they die their family, many off whom have worked in the business or on the farm and helped make it a success should be punished by a greedy government? Do I have that right?

I have a novel idea. Why doesn’t the government determine how much tax revenue they have coming in each year and then put together a budget that stays within that range. That’s what small businesses and family farms do.

People with your attitudes are a godsend to tax and spend politicians. As long as you’re not the one paying it seems totally logical to punish others who took a chance and were successful. Marx and Engels would be proud.


9 posted on 08/01/2021 5:00:44 AM PDT by redangus
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To: qwerty1234

I think Americans should not be taxing people to make outcomes more equal however good that seems in any individual case. Additionally Capital gains are earned on money that has been taxed once already. Having destroyed large swaths of the economy by ignoring cause & effect those behind the puppet Ziden have their eyes on a new area to destroy.


10 posted on 08/01/2021 5:02:27 AM PDT by JayGalt (The dogs bark but the caravan moves on.)
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To: 11th_VA

I’ll advise Mom to massively increase gift giving.


11 posted on 08/01/2021 5:06:05 AM PDT by Uncle Miltie (Critical Race Theory: black behavior is so bad it must be whitey's fault.)
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To: qwerty1234

Why should it be taxed at all?


12 posted on 08/01/2021 5:17:48 AM PDT by Sacajaweau
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To: qwerty1234

So it’s okay with you to let the government tax an asset that the parent created and leaves to his kids at his death at a tax rate of 43%, even after the parent has already paid taxes on the same asset? And why would you care? If Bezos pays no taxes it’s because the tax laws are written so he doesn’t. Besides this article is not correct. The tax is owed at the estimated Asset value at the time of the parents death. So the exemption from tax is being lowered to $1m from $22m. So on a $22m family farm the tax would be $8m. And you think that’s okay? This why family farms have to be sold. Most of these Assets are family businesses with employees who will lose their jobs. And that’s okay with you? This is the kind of evil that all of us are facing, but you think it’s okay. At $1m exemption, Estate taxes will hurt all of us.


13 posted on 08/01/2021 5:20:06 AM PDT by abbastanza
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To: qwerty1234
There's 2 parts to your example; 1) paying a tax on the gain from $1,000 to $10,000,000 and 2) When do you pay the tax; at the time of inheritance or at time of actual arms-length-transaction sale?

One problem with paying the tax at inheritance (or date of passing) is that you would basically have to sell some portion of the asset in order to pay the tax. That's easier to do with stock holdings than real property such as a family farm. And the date of passing might not correspond to a good time to sell, which means a forced sale to pay the tax. An alternative would be borrow money against the asset, thus avoiding a sale.

And, if you sell a portion of the holding at $100/unit and value the rest of the asset at $100/unit, and then the value drops when you dispose of the rest, you can't take the entire capital loss in one year unless you have offsetting gains. There is a $3,000 annual limit on long-term capital losses that can be shown on a 1040. Plus, if you die before you use up all of the unused portion of the long-term loss, the unused portion dies with you.

A long time ago, I had to take an income tax course in order to get my Accounting degree. On the first day of class, the professor opened with, "There are 3 things you need to memorize about taxes, because somebody will always being changing everything else and you will have to look it up". The third thing was "The only fair tax is the tax that taxes you and not me."

Getting back to the article, the dems would probably have an easier time passing this change by excluding family farms. But that would take away a bargaining chip, and everything in DC seems to be more about demonizing the other guy than doing anything useful.

14 posted on 08/01/2021 5:25:18 AM PDT by Bernard (The very best scientific articles always contain this phrase: “My personal intuition has been…”)
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To: qwerty1234
Your post is a good one. There are two different issues in play here: (1) the step-up in basis, and (2) the timing of the transaction for capital gains tax purposes.

Item (1) should be eliminated entirely -- for the reason you described. But it can be eliminated without assessing a capital gains tax under Item (2).

In the example you used, there could be a provision that allows the capital gains tax to be deferred for the next generation without stepping up the cost basis of the asset. This could be done through some variation of what is called a Section 1035 exchange, whereby an asset can be sold with no immediate capital gains tax liability if the proceeds of the sale are used to purchase a "like kind" asset. It's very common in real estate. I suspect Donald Trump has been doing this for years.

Using your example, there's no reason why the tax code couldn't be written so that the estate doesn't pay a capital gains tax on the $10 million value of the Apple stock immediately upon the death of the owner, but the cost basis of the stock remains the same ($1,000) when the ownership is transferred to the heirs. The point here is that SOMEONE will ultimately have to pay the tax on the capital gain, at some indeterminate point in the future.

The law could even be written in such a way that there is a decades-long window that closes after a certain number of years before the tax is due, or in a way that allows this transaction to be made only once -- from one generation to the next -- before the tax must be paid on the passing of the next generation.

15 posted on 08/01/2021 5:40:58 AM PDT by Alberta's Child ("And once in a night I dreamed you were there; I canceled my flight from going nowhere.")
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To: abbastanza
The U.S. tax code has included exemptions for family farms for years -- at least since the 1990s.

The exemption includes an important provision, though: The family farm is only exempt from the estate tax if the next generation continues to run it as a farm.

I know some families where the second generation complained endlessly that they had to sell the family farm in order to pay estate taxes. In every case, the people doing the whining had no interest in farming. The second generation were middle-aged adults who worked as successful professionals -- usually in big cities hundreds of miles away from the "family farm" -- and they hadn't done any farming since the day the left home for college.

16 posted on 08/01/2021 5:46:04 AM PDT by Alberta's Child ("And once in a night I dreamed you were there; I canceled my flight from going nowhere.")
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To: qwerty1234

MUCH of the ‘increase in value” is NOT controlled by the owner of the asset. Inflation, supply & demand, etc are all factors.

The 3 year old house I bought in S Calif in 1966 for $25,250, is now selling for about $750,000. I took good care of that property for 29 years, but that kind of “value increase’ is certainly NOT created by the owner beyond strong upkeep.

At the same time, anyone who moves, has to pay those same kinds of prices for something different .


17 posted on 08/01/2021 6:27:04 AM PDT by ridesthemiles ( )
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To: qwerty1234
I agree with you.

If the concern is "Family Farms", then exempt land.

Right now, there are trillions of dollars in untaxed wealth in the form of 401k, 403b, and IRAs. There are laws in place to tax this untaxed wealth...Required Minimum Distributions (RMDs). If someone dies before withdrawing their untaxed wealth, the heirs pay the tax as the money is withdrawn.

IMHO, Tax laws need to be changed to tax the untaxed wealth of the dot com billionaires, similar to RMDs.

18 posted on 08/01/2021 6:42:19 AM PDT by FtrPilot
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To: qwerty1234

I call BS on your post. You ain’t anti-tax. You also don’t understand the nefarious aspects of this change, forcing family farms to sell to BIG AG. P.S. the capital gains would be included in your estate and taxed at THAT point if it exceeds the Exemption.


19 posted on 08/01/2021 6:44:52 AM PDT by WilliamWallace1999 (It's a Chinese virus)
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To: 11th_VA

Raise taxes on the wealthy (everyone) and help pay for his social spending.

How Marxist banking works democrats logic for spending.


20 posted on 08/01/2021 8:07:28 AM PDT by Vaduz (women and children to be impacIQ of chimpsted the most.)
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