Biden’s inheritance tax plan is about to be cut in Congress

A key Biden administration proposal to collect more tax revenue from wealthy people looks set to be watered down by lawmakers and may even be scrapped entirely from the Democrats’ tax and social spending agenda, people close to the report say. folder.

Democrats in the House and Senate set to trim or drop the president Joe BidenThe proposal to significantly limit the tax exemption known as the base relief for property passed on to heirs on death, said the people on condition of anonymity because the talks are private.

Biden had proposed raising the capital gains tax rate for top earners to 39.6% from 20%. If Democrats drop plans to treat death as a taxable capital gains event for individuals whose real estate and other assets appreciate more than $1 million, a capital gains rate above 28% would cost probably money to the federal government.

The situation remains fluid, with efforts to draft the tax portion of the Democrats’ $3.5 trillion social spending plan expected to continue through the weekend, the people said.

Biden’s proposal aims to both tax inherited wealth and help offset programs like a multi-year extension of an expanded child tax credit or paid family medical leave. Adjustments to Biden’s plan could mean Democrats must also scale back their aspirations to equalize the treatment of labor income and long-term investment income, a stated priority of progressives.

Chances of dimming

Third-party estimates of how much the Biden administration’s plan would raise range from $213 billion to about $400 billion over 10 years.

Representing Bill Pascrella senior member of the House Ways and Means panel, said in an interview on Friday that he believed the administration’s proposed changes to increase the base faced a surge to be included in the committee’s bill, minimizing its chances compared to those related to the resolution of the cap on state and local tax deductions, or SALT.

“If I was a bettor, I would probably think it’s not as lucky, from this point on, as a SALT reprieve or a SALT threshold change,” said the New Jersey Democrat, who has makes the repeal of the SALT delisting limit of $10,000 a top priority.

The White House did not immediately respond to a request for comment.

Senate Democrats are already foreseeing the possibility of scaling back some of Biden’s proposals by focusing revenue-raising efforts more on corporations than individuals.

Alternative diets

Earlier Friday, the chairman of the Senate Finance Committee Ron Wyden introduced two new proposals likely to be included in the Senate’s comprehensive bill later this month: an overhaul of the tax treatment of business partnerships and a 2% excise tax on stock buybacks that has was co-sponsored by the Chairman of the Senate Banking Committee Sherrod Brown from Ohio.

Such proposals are considered less politically risky than the 28% corporate tax rate desired by the White House, since several Democratic senators have said they prefer a corporate tax rate closer to 25%, while generating other income to make up the difference.

On taxing gains on inherited assets, Bloomberg reported last week that Democrats are considering larger exemptions — $5 million per person and $10 million per couple — which means taxing inherited assets would start after these totals.

Democrats were also considering a special exclusion worth an additional $25 million per couple for family farm property passed to heirs, though that exemption could be even higher when Senate tax language is introduced later this month. this.

Agricultural interests

The proposed exemptions reflect high-profile opposition to the proposal from congressional Democrats who represent agricultural areas, as well as broader concerns among rank-and-file members of both chambers about the politics and effects of making death an event. taxable for more Americans.

Democrats, including the chairman of the House Agriculture Committee David Scott of Georgia, senior member of the House Ways and Means Committee mike thompson Senator from California and Montana Jon Tester all expressed reservations about the administration’s proposal.

“The strengthened core proposals that Senator Tester has seen to date would negatively impact family farms, ranches and small businesses in Montana, and he will continue to fight to defend these people against short-sighted policies. that put their operation at risk,” Tester spokesman Roy Loewenstein said in an email. “As this important process moves forward, Senator Tester is committed to working with his colleagues to ensure that all package is fully paid and works for rural America.”

–With the help of Jenny Leonard.

To contact the reporter on this story:
Colin William in Arlington at [email protected]

To contact the editors responsible for this story:
Scott Lanman to [email protected];
Patrick Ambrosio to [email protected]

Christopher Anstey

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