Benjamin Franklin noted that “in this world nothing is certain except death and taxes.” He never said that these two certainties had to go hand in hand. This later came with the imposition of inheritance tax, also known as inheritance tax.
The federal death tax, enacted in 1916, is levied “on the transfer of the taxable estate of each deceased who is a citizen or resident of the United States.” It tends to fall harder on farmers and small business owners looking to pass their assets on to the next generation.
Instead of cash, their assets are more likely to be dominated by land, livestock and equipment. As a result, the deceased’s heirs may have to sell much of what they have inherited just to pay their tax bill.
I believe it is unfair tax policy that is hurting residents of the ninth congressional district of Virginia. Throughout my time in Congress, and previously in the State House of Delegates, I have consistently supported efforts to reduce or eliminate the death tax entirely. Earlier this year, I co-sponsored HR 1712, the Death Tax Repeal Act.
Progress has been made on the 2017 Tax Cuts and Jobs Act passed by Republicans in Congress and signed by President Trump. He increased the death tax exemption so that its burdens fell on the wealthiest people.
Now, a new threat hangs over the ability to pass on one’s property to one’s heirs.
President Biden has many plans in place to boost federal spending. They are a cause for concern because of their waste and misplaced priorities, but also how the Biden administration wants to pay them.
Among President Biden’s proposals to increase the burden on taxpayers is the repeal of the “raised base” and the taxation of capital gains on death. These actions would amount to a second death tax and, like the original death tax, would fall hardest on family farms and small businesses.
The grossed-up basis allows heirs to pay tax only on the capital gain since the date of inheritance and only applies when the assets are sold. With this provision, if a family member inherits an asset, such as land or a farm that has been in the family for generations, he or she is not hit with a disproportionate tax bill if the value of this property has increased sharply since its first came into the possession of the family.
As a state delegate, I once worked with two elderly gentlemen who had their property cleared, a mountain in the Ninth Congressional District. They had grown up on this property in cabins without running water or electricity. The property itself came from a grant from the King given to their families for services rendered in what I remember being the French and Indian War, which ended in 1763.
President Biden’s plan would end the grossed-up base and tax capital gains on death. By the way, his plan also aims to double the current tax rate for all capital gains. His plan would take a huge chunk of the value of land that had belonged to the families of these two gentlemen for over 250 years.
I know of many families in Southwest Virginia who are also said to be threatened with death taxes, forcing their property to be sold to developers.
The plan found a place on Biden’s tax agenda despite evidence that it would cut jobs and wages. A study conducted by accounting firm Ernst & Young for the Family Business Estate Tax Coalition found that these changes could reduce wages by $ 32 for every $ 100 of new taxes collected, eliminating 80,000 jobs per year in the first ten years. and eliminate 100,000 jobs by each year thereafter.
The resulting damage to the U.S. economy would be an annual impact of $ 10 billion on our gross domestic product, or a total of $ 100 billion over the next decade.
If enacted, the repeal of the enhanced base and the imposition of capital gains taxes on death would place a heavy administrative burden on the family of the deceased and on those involved in estate planning. They should determine the growth in value of an asset since it is owned by the family, which for some landowners in Southwest Virginia means a calculation of inflation and appreciation through the years. 1760.
The costs imposed by a second death tax would be severe, not only in monetary terms, but for the idea that Americans should be able to pass on the benefits of their hard work to their descendants. It is too high a price to pay for President Biden’s heavy expenses.
If you have any questions, concerns, or comments, please feel free to contact my Abingdon office at 276-525-1405, my Christiansburg office at 540-381-5671, or the website at www .morgangriffith.house.gov.
Morgan Griffith represents the ninth district of Virginia in the United States House of Representatives.