Americans know that Joe Biden wants to raise their taxes, but they might not realize he’ll be coming for their money even after they’re dead.
In The Wall Street Journal, Richard Rubin and Rachel Louise Ensign outline Biden’s plan, writing:
President Biden has proposed raising the top capital-gains tax rate to 43.4% from 23.8% and taxing appreciated assets at death as if they had been sold. Under current law, appreciated assets held until death escape the income tax. Heirs pay capital-gains taxes only when they sell and only on gains since the prior owner’s death.
Tax lawyers are looking at two basic approaches—act now or wait it out.
Acting now entails using any room available to get assets to heirs and trusts this year without paying gift taxes. That lifetime exemption is now $11.7 million per person, and people who didn’t move assets after Mr. Biden’s election have incentives to do so now. Under the Biden proposal, making gifts of appreciated assets this year wouldn’t trigger capital-gains taxes, but doing so next year would yield taxation equivalent to a sale.
Waiting means delaying decisions until it is clearer what this Congress will do—or until a future Congress reverses any tax increases. And if Congress starts to tax appreciated assets at death, there will be an instant and powerful lobby of people trying to get the law changed when power shifts. The waiting game is more palatable for younger entrepreneurs and investors and tougher for older people trying to cash out of their businesses or worrying that they won’t be able to live long enough to see any new rules get repealed.
All of this potential tax planning is preliminary because it takes place against an uncertain backdrop. With slim Democratic majorities in the House and Senate, Mr. Biden would need the votes of every Senate Democrat and almost every House Democrat to raise taxes on the top sliver of wealthy Americans.
Some Democrats have already expressed reservations about the proposal to raise the capital-gains tax. And any bill Congress does pass isn’t guaranteed to look exactly like the White House proposal, said Ani Hovanessian, a partner at Venable LLP.
Among wealthy individuals, “there’s a lot of anxiety and nervousness that’s being generated by all the proposals,” Ms. Hovanessian said.
Until COVID-19 hit, the Trump tax cuts of 2017 put America on course for its lowest unemployment since 1969. The system was working well.
Now, to pay for his corporate giveaway infrastructure bill, and to achieve the environmental goals of The Great Reset, Biden wants to ramp up taxes on individuals and businesses, even the dead.
Action Line: If you haven’t already begun planning for Biden’s tax hikes, start today. To help protect your wealth, you may want to move to one of America’s growth corridors to live a “liberty retirement.”
