House Democrats consider repealing inheritance tax provision

House Democrats consider repealing inheritance tax provision

Chairman Representative of the House Ways and Means Committee. Richard Neill, D-Mass., (Left) and non-commissioned member Kevin Brady, R-Texas.

Chip Somodevilla | Getty Images News | Getty Images

House Democrats on Monday unveiled a package of tax hikes on corporations and the wealthy without a proposed levy on assets inherited on the death of President Joseph Biden, according to an overview from the Ways and Means Committee.

Currently, heirs can defer taxes on inherited gains until the property is sold. According to an estimate by the Joint Commission on Taxation, they also benefit from a so-called increased tax provision, by adjusting the purchase price of the property to the value on the date of death, which allows taxpayers to save 41 billion dollars a year. it happens.

Biden demanded that heirs be treated as a sale, requiring heirs to pay taxes on death, with exemptions of more than $ 1 million for single filers and $ 2.5 million for married couples.

With the increase in the capital gains tax, the measure could generate $ 213 billion over 10 years, according to estimates by the Tax Foundation.

However, House Ways and Means Democrats removed Biden’s proposal from their tax plan, shifting other charges to fund his $ 3.5 trillion spending plan.

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According to a summary of the proposals, a plan reduces the inheritance and gift tax exemption to $ 5 million, exposing estates and gifts in excess of that amount to a 40% federal inheritance tax .

Former President Donald Trump increased the inheritance and gift tax exemption to $ 11.7 million for individuals and $ 23.4 million for married couples thanks to Republicans’ tax overhaul in 2017.

However, these provisions will expire after 2025, reducing the limits to $ 6 million and $ 12 million, respectively.

“The lack of ways and means based change shows that concerns remain about how this proposal will affect businesses and family farms,” said Garrett Watson, senior policy analyst at the Tax Foundation.

Although Biden has promised protections for family farms, industry groups, such as the American Farm Bureau Federation, and lawmakers on both sides of the aisle have responded.

In recorded history, we have never seen a family lose their farm to a property tax.

Steven rosenthal

Principal Investigator at the Urban-Brookings Center for Fiscal Policy

“In recorded history, we’ve never seen a family lose their farm to an estate tax,” said Steven Rosenthal, senior researcher at the Urban-Brookings Tax Policy Center. “It just doesn’t happen.”

“But that doesn’t hurt the imaginations of all politicians who want to use the family farm as a straw man,” he said.

These proposals may change as the Ways and Means Committee continues to debate Democrats’ tax policy. While the House may pass the final bill in the coming weeks, the party will also need the support of all members of the Democratic Senate caucus.

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