Biden infrastructure/tax increase megathread

[It’s so Joever]

Manchin is now standing (or pretending to stand) in the way of DC statehood, HR1, the PRO act, and now medicare expansion in this bill? Why has he not been punished by having his committee assignments stripped??

D->R

[Beet]

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.

https://www.bloomberg.com/news/articles/2021-05-04/biden-tax-rule-would-rip-billions-from-biggest-fortunes-at-death

[H.E. VOLODYMYR ZELENKSYY]

Yesssss

[OSR stands with Israel]

Yah and eliminating step up basis would hurt many people in the middle class too

[ultraviolet]

Yah and eliminating step up basis would hurt many people in the middle class too

If by middle class you mean upper class, then yes

[Skill and Chance]

Yah and eliminating step up basis would hurt many people in the middle class too

If by middle class you mean upper class, then yes

Define upper class?  Forcing the sale of family businesses upon the founder's +spouse's death is a real issue if the exemption isn't set reasonably high.  Alternatively, if the exemption is in the millions, it's basically the modern estate tax and raises no money. 

[riceowl]

I understand getting rid of step-up basis but won't it make accounting/auditing incredibly difficult?

[lfromnj]

Also how does the article mention dynastic wealth and at least doesn't use the Walton's/Rockefeller's?

Bezos/Gates had pretty nice upbringing's in the Upper middle class to borderline 1% IIRC but definitely not anything close to billionaires.  Pretty garbage example for dynastic wealth to use a 1st generation billionaire.

[GeneralMacArthur]

Bill and Melinda raised their kids with normal lifestyles and don't intend to pass much, if any, of their money along to them.  They've said in public many times that they don't want their kids to be spoiled billionaire scions who never have to hustle.

Of course that's not true for every billionaire, but are the children of Jeff Bezos, who didn't lift a finger to earn any of his fortune and will all be close to retirement age by the time he dies, really going to cry over only getting $40 billion each instead of $55 billion each, or whatever it ends up being?

I think part of the American dream is making a lot of money and passing it on to your descendants.  Building generational wealth, so that your family climbs the social ladder and you can rise up over the years.  I don't think we should be attacking any "normal" fortune where people try to do that, like $10 million is a pretty reasonable fortune for someone to have accrued over the course of a life and want to leave to their descendants.  But once you start talking about billions and billions of dollars, like, you've already made it, your family is set for the next thousand generations.

[Torie]

Well you just borrow all you can while alive against high unrecognized assets while alive, and go on a wild spending spree, and then there is no money left after death to pay any tax,   when the asset is sold. The mega rich when sick might just leave the country and renounce their citizenship.

[Old Man Willow]

I would rather rip billions from them at life, but I'll take it.

[Lief 🗽]

Nice!

[MasterJedi]

Well you just borrow all you can while alive against high unrecognized assets while alive, and go on a wild spending spree, and then there is no money left after death to pay any tax,   when the asset is sold. The mega rich when sick might just leave the country and renounce their citizenship.

Sounds like a perfect time to pass a law seizing all that wealth if they try it.

[GP270watch]

  There needs to be a whole series of tax reforms that invalidates trusts, tax dodging charitable organizations, global tax shelters, the parking of wealth in speculative assets, and other schemes the wealthy use to shield wealth from taxation.

[Geoffrey Howe]

I think what Ernest said to me about this on the Off-Topic Board seems sensible:

It'll make calculating capital gains on inherited assets needlessly complicated.  It would be better to allow the step up, but collect the tax when the step up occurs. Keeping the tax system simple is why I absolutely oppose indexing capital gains for inflation.

Incidentally, the step up in basis is a principal reason right now to consider being a small landlord, as you get to benefit from depreciation on your taxes, and then leave your heirs property that hasn't been reduced in basis by depreciation. So, if this were to pass, it'll reduce the availability of rental property.

[Beet]

Also how does the article mention dynastic wealth and at least doesn't use the Walton's/Rockefeller's?

Bezos/Gates had pretty nice upbringing's in the Upper middle class to borderline 1% IIRC but definitely not anything close to billionaires.  Pretty garbage example for dynastic wealth to use a 1st generation billionaire.

Because the future is more important than the past. I'd even include people like Mark Zuckerberg. Any tech billionaire with kids and you're looking at the future ruling class of the world. It's not just the money these people have but their insider status in the world of digital gold and the Fourth industrial revolution.

[Buffalo Mayor Young Kim]

Yah and eliminating step up basis would hurt many people in the middle class too

We can quibble about definitions, but I feel confident saying that if a substantial portion of your wealth or income is directly effected by capital gains, you are going to be OK.

[President Johnson]

Hopefully Uncle Joe is finally successful in moving this forward.

https://twitter.com/CNNPolitics/status/1392191804372566018

[Sir Mohamed]

https://twitter.com/ABC/status/1393174776781361154

[Hope For A New Era]

It really does seem like things are finally happening again the last few days. Always good to see.

[Frodo]

https://twitter.com/ABC/status/1393174776781361154

For the sake of a bipartisan agreement, we should agree largely with Republicans on the definition of ‘traditional infrastructure’ and on funding it, bearing in mind we can always repeal the 2017 tax cuts (for the most part) like we always wanted to fund the ‘human infrastructure’ portion that we have agreed will be passed via reconciliation.

[Starry Eyed Jagaloon]

https://twitter.com/ABC/status/1393174776781361154

For the sake of a bipartisan agreement, we should agree largely with Republicans on the definition of ‘traditional infrastructure’ and on funding it, bearing in mind we can always repeal the 2017 tax cuts (for the most part) like we always wanted to fund the ‘human infrastructure’ portion that we have agreed will be passed via reconciliation.

Agreed. Honestly, I think passing this in a bipartisan way is fine. Move some stuff over to the American Families plan and use reconciliation for that later on--giving this the credence of bipartisanship and giving us another reconciliation bill. Provided, of course, that republicans don't gut the passenger rail funding here--but I think Amtrak Joe will negotiate that just fine.

[H. Ross Peron]

Ok this is bad

https://twitter.com/JStein_WaPo/status/1395790089310064651

[H. Ross Peron]

Ok this is bad

https://twitter.com/JStein_WaPo/status/1395790089310064651

Even more compromise:

https://twitter.com/JStein_WaPo/status/1395823994729861123

[brucejoel99]

The $1.8T package is just the counter-offer to the Senate GOP's offer, so if/when the Senate GOP doesn't go for it, then Biden & Congress will presumably just budget reconciliation a package of whatever size they want (i.e., the original $2.3T).

Also, the public option was never gonna be a part of a fiscal year's budget proposal in & of itself. Rather, it was always - & still remains - very likely to constitute the FY2023 reconciliation package that Congress would pass ~this time next year.