President Joe Biden proposes to impose higher capital gains taxes on inherited assets, with promised protection for farms and other family businesses that continue to operate.
The change is set to help pay for a $ 1.8 trillion package of benefits announced Wednesday. The proposal, known as the American Families Plan, includes expanded child nutrition support, free community college, universal preschool, paid family and sick leave, and an extension of the Affordable Care Act subsidies.
Under current law, capital gains taxes are only levied on inherited assets such as land, buildings and stocks when they are sold. They are then taxed on the “increased base” – the value at the time of death of the deceased. not the value at which the deceased originally acquired the property.
A summary of the president’s plan states that he wants to “close a loophole that allows the richest Americans to completely evade tax on their wealth by passing it on to their heirs”, exacerbating income inequality.
“The President’s plan will fill that void and end the practice of increasing the base for profits greater than $ 1 million ($ 2.5 million per couple when combined with existing real estate exemptions) and ensuring that profits will be taxed if the property is not donated to charity, “says the executive summary.
“The reform is designed with safeguards so that family businesses and farms do not have to pay taxes when given to heirs who continue to run the business. Without these changes, billions in investment income would continue to escape taxation entirely. “
The White House has not given any specifics on their proposal beyond those sentences at the end of the 15-page summary of the plan, including protecting farms from taxes. Biden will further discuss the efforts in an address at a joint congressional session on Wednesday evening.
The plan appears to be in line with a proposal that Senator Chris Van Hollen, D-Md., Announced in March that included a $ 1 million exemption.
The president is not proposing changes to inheritance tax laws, but is proposing to raise the highest individual tax rate from 37% to 39.6% and to require all households with incomes greater than $ 1 million to apply that rate to their total income to be paid, including capital gain.
Farmers’ groups have campaigned with the legislature to oppose Biden’s proposals that would increase the taxation of inherited estates.
Senator Tammy Baldwin, D-Wis., Told North American agricultural journalists that farm managers in her state raised the issue with her.
“I am not on the finance committee (which is responsible for tax policy) but I will speak to my colleagues there to make sure they are aware of farmers’ concerns about this issue,” she said.
To address food insecurity, Biden’s plan would extend the USDA Summer EBT program to all children across the country who are eligible for free and discounted meals during the school year. The EBT program offers support when buying groceries in summer. Expanding the program would cost $ 25 billion.
The plan also aims to increase the number of high poverty schools where all children are automatically entitled to free meals under a “community eligibility scheme” at a cost of US $ 17 billion. The proposal would offer free meals to an additional 9.3 million children, 70% of whom are in elementary schools, the summary said.
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