[A new GOP bill, formally entitled the ’Death Tax Repeal Act,’
would enable our super-rich to avoid both income and estate tax on
their investment gains.]
[[link removed]]

THE REPUBLICAN ‘BILLIONAIRES PAY ZERO TAX’ ACT  
[[link removed]]


 

Bob Lord
April 4, 2023
Inequality.org
[[link removed]]


*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

_ A new GOP bill, formally entitled the ’Death Tax Repeal Act,’
would enable our super-rich to avoid both income and estate tax on
their investment gains. _

,

 

Under America’s current loophole-ridden tax law, rich people —
even billionaires — can pass unlimited investment gains to their
descendants without paying a dollar in income tax. These rich don’t
even have to do any fancy planning. All they have to do is die, a step
everyone, of course, takes eventually.

This particularly lush loophole comes from a tax law provision known
as the “stepped-up basis rule,” and it works like this: Say Jeff
Bezos died and left his Amazon shares, currently worth over $100
billion, to his kids. The Bezos kids would be treated under our income
tax law as if they bought the shares for their value on the date of
dad’s death. They could sell the shares at that value and pay no
income tax.

But that doesn’t mean those kids would pay no tax at all. Dad’s
estate would face an estate tax liability equal to 40 percent of the
excess of the value of his estate, including the Amazon shares, over
$13 million. Estate tax avoidance planners could, to be sure, help Mr.
Bezos avoid much of that estate tax, possibly even all of it. But
doing so likely would mean the kids couldn’t avoid income tax on his
investment gains.

This can all get super-complicated. The tricks tax avoidance planners
play to shelter wealth from estate tax can make it difficult to avoid
income tax. Not impossible, mind you, just really difficult. But not
if 41 — and counting — Republican U.S. senators have their way.

Under legislation 
[[link removed]]these
41 Republicans have just re-introduced, billionaires like Mr. Bezos
won’t need to choose between avoiding income tax and avoiding estate
tax. They’ll be able to avoid both. Entirely. And without a lot of
effort. They won’t even have to hire high-priced tax avoidance
planners.

The new Republican bill, formally entitled the “Death Tax Repeal
Act,” completely repeals the estate tax. Those strategies
billionaires use to avoid estate tax — strategies that typically
expose their investment gains to income tax sometime after their
deaths — would no longer be needed.

In fact, those strategies would become counterproductive. All
billionaires would have to do to avoid both income and estate tax on
their investment gains would be to not sell their investment assets
during their lifetimes.

But wait? What if our tax-averse billionaires need some cash? Not a
problem. As ProPublica has reported
[[link removed]],
billionaires have a handy, tax-skipping strategy for getting cash
known as Buy-Borrow-Die. This video explains how this whole process
works.

The sponsors of the new Billionaires Pay Zero Tax Act don’t mention,
of course, their billionaire patrons in their advocacy. They refer
instead to all the “family-run farms, ranches, and businesses”
upon which the estate tax would “wreak havoc.” What they don’t
say: Only 50 farms and businesses in the entire country likely would
have been subject to estate tax in 2017, according to Center on Budget
and Policy Priorities research. And the Center did that
research _before_ lawmakers in Congress doubled the exemption from
estate tax in the 2018 Tax Cuts and Jobs Act.

The Billionaires Pay Zero Tax Act sponsors also don’t mention that
our U.S. tax code already has provisions that protect the very few
families with farms and businesses subject to estate tax. If the bill
sponsors truly cared about family farms, ranches, and businesses, they
could have proposed legislation to expand these protections but leave
the estate tax intact.

These lawmakers might have proposed, for instance, a lengthening of
the 15-year period the inheritors of family farms, ranches, and
businesses currently have to pay their estate tax due. Or they might
have proposed an expansion in the “special use” provisions that
allow estates to value farm property according to its use as a farm,
rather than at its market value. A bill taking that approach likely
would have drawn bipartisan support and actually had a chance of
becoming law in this Congress.

Why have Republicans purporting to be concerned about family farms,
ranches, and businesses rejected this extending-protections approach
and instead introduced a bill whose benefits will flow overwhelmingly
to the ultra-rich?

Here’s my guess: The actual intended beneficiaries of the bill
don’t happen to be family-owned farms, ranches, and businesses. But
GOP lawmakers know full well that saying you don’t think
billionaires should have to pay any tax at all, ever, doesn’t make
for good messaging.

Saying that would be like naming your bill the “Billionaires Pay
Zero Tax Act.”

_Veteran tax attorney Bob Lord, an Institute for Policy Studies
associate fellow, is currently serving as a senior advisor on tax
policy for Patriotic Millionaires._

* Income Inequality
[[link removed]]
* tax fairness
[[link removed]]
* inheritance tax
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]

Manage subscription
[[link removed]]

Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]