When the House Ways and Means Committee produced its components of the Build Back Better Act, it omitted a proposal to tax unrealized capital gains at the time of a person’s death. A recent study from global tax, accounting and advisory firm EY may help explain why. The analysis, examining five major tax proposals that were under discussion, found that taxing these gains at death, paired with an increase in the capital gains rate, provided little in terms of benefits. It would do significant economic harm, while generating relatively little revenue to offset all that pain. As the report, produced for the Small Business and Entrepreneurship Council, lays out, this policy is “the most economically harmful in terms of their adverse impact on GDP per dollar of revenue either over the 10- year budget window or in the long run.”
As Washington continues to debate what will be in a $3.5 trillion reconciliation bill, the issue of taxing unrealized gains on inheritances led dozens of organizations from across the country representing farmers, ranchers, and agribusinesses to send a letter to the Chairmen and Ranking Members of the House Ways and Means and Senate Finance Committees outlining their concerns. The Tax Aggie Coalition, made up of 41 national and regional agricultural groups, sent the letter yesterday.
Former Democratic Senator Heidi Heitkamp, one of the party’s leading voices on tax policy, said President Joe Biden’s proposal to tax appreciated assets upon death would hurt family farms and family- owned businesses.
“I’m trying to sound the alarm, both economically and politically, for Democrats that this is not a path to walk,” she said in an interview on “Squawk Box.” “The disruption that it would create for small family business and farmers and family assets is not worth the pain.”