Interesting point made on Stephanie Miller Show about taxes I had not

[Ilsa]

Last edited Wed Nov 1, 2017, 02:10 PM - Edit history (1)

Considered.

ON EDIT: PLEASE IGNORE THIS POST AND CONTENTS. I WAS WRONG ABOUT WHAT WOULD HAPPEN.

A caller said if the estate tax is eliminated, then everyone who leaves assets under the $5+ million threshold will have to pay capital gains taxes -20%.

In other words, if you leave a $250,000 house to your heir(s), they have to cough up $50,000. The people with a $20 million estate only pays $4 million, whereas they would pay$8-10 million (?) before. They get a huge cut. Ordinary people get a huge increase.

I know I don't have the math exactly right, but it looks like this would happen.

[Vinca]

1. When hasn't the middle class been screwed to give tax breaks to the rich?

[The Velveteen Ocelot]

2. I don't think that's correct.

Eliminating the estate tax only means that nobody would have to pay it. As it is now, certain estates (over $5 mil) have to pay the tax (some states also have an estate tax). This has nothing to do with capital gains. If you inherited an asset that was worth $250K at the time the decedent died, you'd have to pay a capital gains tax on the amount of the appreciation of the asset since the date of death. In other words, if you sold that asset for $300K, you'd have to pay a capital gain tax on $50K, which is currently 15% in most cases. So the tax would be $7,500. And this would happen whether or not an estate tax was paid. The two kinds of taxes are unrelated.

[Ilsa]

11. Thank you for correcting me. NT

[Sneederbunk]

3. Not true under current law. Step-up basis.

[Ilsa]

15. Thank you for correcting me. NT

[marylandblue]

5. I looked this up regarding inherited houses

The cost basis is the fair market value on the day you inherited, so if you sell immediately you pay no capital gains.

[Ilsa]

16. Thank you for correcting me. NT

[Hoyt]

6. I like Miller. But if I made enough to need a tax adviser, I'd find someone

who knows what they are talking about. I think she's wrong on this.

[The Velveteen Ocelot]

7. Absolutely dead wrong. Don't get tax advice from radio talk shows.

[Ilsa]

13. Wasn't "taking advice." Just concerned

over the proposed changes.

Thanks for correcting my accounting error, though.

[GusBob]

9. It was a caller. She didn't even pretend to know what he was saying

And freely admitted to that after he hung up.

I got the callers point it took some second order thinking

[Ilsa]

14. See my reply to the one to you and my

Other appreciative notes for correcting me.

[Hoyt]

17. With Trump's advisers anything is possible, and it's easy to see why people suspect

everything he does. Over the years, there have been discussions/proposals of keeping an asset basis at that of the owner before death. That would be essentially what the caller was saying. It's just that Trump or Congress hasn't specifically proposed that, at least to my knowledge.

When you think about it, it might not be a bad idea especially for high dollar assets. Why should a family escape capital gains tax just because the old rich guy died?

[Ilsa]

19. I think some kind of tax should be paid

When property is passed on, but there should be reasonable exemption levels and perhaps no tax on certain types of assets, perhaps family farms, very small businesses, etc.

But the mega estates (Koch Bros, DeVos, etc) need to be divided for the sake of the nation. Excessive financial power should not be allowed to be vested in very small groups like that. I think it's dangerous and unhealthy. Sure, they can buy insurance policies to pay most of the tax debt, but I don't believe in passing on billions, hundreds of millions, etc.

Plus, there are tens of thousands of charities that could benefit from large gifts.

[Big Blue Marble]

8. That is not true.

When you leave capital assets to your heirs, they receive them at the value that is set at your death.

If the heir sell immediately, there would be no capital gains tax. If the heir sells later, the only
cap gain tax is that on any appreciation after the date of death of the deceased.

[Ilsa]

12. Thank you for correcting me. NT

[gibraltar72]

10. I'm ok

with people lying and misrepresenting to get this thing stopped. That's what Republicans are doing to get it passed. It's called fighting fire with fire!

[The Velveteen Ocelot]

18. I'm not.

You saw how easy it was to refute the claim in the OP. It makes no sense to propagate false or inaccurate statements that can be so readily debunked; it just hurts your credibility and adds to the claim that all news is "fake." The only people who usually believe Trump's bullshit are his rapidly-shrinking base, now only about 33% - almost Nixonian. There's no upside to doing what he's doing.