Bloomberg News: Biden Tax Rule Would Rip Billions From Biggest Fortunes at Death (May 4, 2021)

Bloomberg News has published an article examining the impact of the Biden proposal to eliminate the step up in basis at death on the fortunes of the wealthiest individuals. The Article begins as follows:

Jeff Bezos has an ex-wife, a girlfriend, four children and billions of reasons to watch whether Joe Biden’s tax overhaul wins congressional approval.

The Amazon.com Inc. founder’s heirs may have to pay more than $36 billion if the president succeeds in closing a loophole that helps the rich transfer their fortunes tax-free at death.

Under current rules, whoever inherits the Amazon shares Bezos bought in 1994 for $10,000, worth $180 billion today, will receive a so-called step-up in basis, wiping out any capital gains tax liability. Biden’s plan would close that loophole and apply the top capital gains tax immediately when assets transfer to wealthy heirs. If the rate increases — it’s 20% for holdings like Bezos’s, and Biden has called for boosting it to 39.6% — the eventual tax bill would too.

For Bill and Melinda Gates, who announced on Monday that they would be divorcing, a change in the step-up rule might be less costly. The Gates fortune, valued at $145.8 billion, is older, and they’ve already sold or donated much of their stake in Microsoft Corp. But $26 billion of Microsoft shares remain, and it isn’t clear how the couple will manage their assets in a split.

Congress estimates that stepping up the tax basis of inherited assets costs the government about $43 billion a year. Ending that practice and raising the rate would amount to the biggest curb on dynastic wealth in decades, altering an American economic landscape dominated by a few wealthy families. An Amazon spokesman didn’t respond to emailed questions about Bezos’s shares.

To see the full article, click Bloomberg News: Biden Tax Rule Would Rip Billions From Biggest Fortunes at Death (May 4, 2021) (subscription may be required).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s