What You Need to Know
- The proposed capital gains tax hike came out the winner in a Twitter poll.
- Elimination of the stepped-up basis on assets at death would have the biggest effect, some commenters argued.
A day before President Joe Biden’s scheduled first address to a joint session of Congress Wednesday evening, Jeffrey Levine, chief planning officer at Buckingham Wealth Partners, sparked a debate on Twitter, asking his followers to vote on whether Biden’s ordinary income tax, capital gains tax or estate/gift tax proposal would have the biggest impact.
Biden’s proposed capital gains tax hike came out on top, at 39%, ahead of the ordinary income tax’s 32.6% and the estate/gift tax’s 28.4%.
Which of the following proposed changes to the Tax Code do you think will have the biggest impact?
(Feel free to share your perspective on "Why?" with a comment)
— Jeff "The Buckinghammer" Levine, CPA/PFS, CFP® (@CPAPlanner) April 27, 2021
The Biden plan, unveiled Wednesday morning, laid out $1.8 trillion in spending over 10 years to support American families, with a major expansion in spending on child care, paid leave and education. The American Families Plan, which Biden will tout in the joint address to Congress Wednesday night, is funded in part by $1.5 trillion of tax hikes on the wealthiest Americans.
The potential capital gains tax increase stands to affect “a lot more people than people realize,” Levine told ThinkAdvisor in a phone interview on Friday. “It’s not the clients that make a million dollars or more every year that you need to be worried about.”
A proposed elimination of the step-up in basis on assets at death, along with making death a “realization” of gains, meanwhile, will essentially mean that all assets will be treated as if they have been sold on the day that somebody dies, Levine also said on Friday.