It is perhaps time to fret about property tax
The abolition of the top-up rules could raise billions in taxes from the rich, but hurt some people who do not have enormous wealth. Imagine a hypothetical couple who bought their home for, say, $ 75,000 40 years ago, paid the mortgage, maintained the yard, made some upgrades, and now looked at a home worth $ 300,000 or more . For many families, such a house forms the basis for a modest property that can be passed on to the heirs. If heirs ever sell this home, they will only be responsible for profits over $ 300,000. If the base increase were eliminated, they would owe taxes on any amount in excess of the original $ 75,000.
Losing an increase in base upon death would change the calculation for real estate and other highly valued assets. (Think Apple stock bought in the 1980s or Bitcoin 10 years ago.)
“Most of America has its wealth concentrated in its homeland,” said Chris Bixby, senior wealth adviser at Mariner Wealth Advisors. “That would depend on the increase. I speak to people about the earlier donation of the house to include in the name of their heir, so the appreciation is on their behalf, not yours. “
This can be a step too far for many people looking to retain ownership of their home.
There is also a broader stock offering.
Eliminating the base top-up could make it more difficult to fill the racial wealth gap, said Calvin Williams Jr., executive director and founder of Freeman Capital, an asset management firm. He noted that the Brookings Institution found that black families, on average, have about a tenth of the wealth of white families – $ 17,150 versus $ 171,000. In addition, Brookings estimates that only 10 percent of black families inherit money, averaging about $ 100,000, compared to about 30 percent of white families who receive about $ 200,000.
Abolishing the top-up rule would make it harder for black families to pass on the wealth they have amassed, he said. “The fact that the inheritance gap has continued to grow, even though black income continues to grow, shows how much work must be done to fill that gap,” he said.
It might be more equitable to put a cap on the top-up of the base exempting people below a certain fortune, he said: A $ 500,000 exemption would bring relief to many middle-class families. This would be mentally similar to another proposal under consideration by the Biden government, which is to increase capital gains taxes for those earning more than $ 1 million a year.