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Financial Planning > Tax Planning

‘An Estate Tax Every Year’: Ed Slott Blasts Plan to Tax Billionaire Wealth Gains

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What You Need to Know

  • President Biden backs Sen. Wyden's proposal to tax billionaires on gains in their wealth every year.
  • The plan, which resembles the wealth tax proposed by Sen. Warren, would be impractical to implement, Slott says.
  • Targeting billionaires' unrealized gains is an alternative to eliminating the step-up in basis, a politically unpopular move.

President Joe Biden recently threw his support behind a plan put forth by Sen. Ron Wyden, D-Ore., to place an annual income tax on billionaires’ unrealized capital gains, a move that tax specialist Ed Slott says is akin to Sen. Elizabeth Warren’s proposed wealth tax.

The Wall Street Journal reported Friday that when asked about Wyden’s proposal, Biden stated: “Look, I support a lot of these proposals. We don’t need all of the proposals I support to pay for this.”

Slott, founder and president of Ed Slott & Co., told ThinkAdvisor Tuesday in an interview that with Wyden’s plan, the “Senate is providing an alternative [to eliminating the step-up in basis], which looks just like the Warren wealth tax; that would be an estate tax every year.”

Added Slott: “People that have that kind of massive wealth have it tied up in assets maybe all over the world. Doing a valuation … it’s hard enough when a billionaire or a very wealthy person dies, they have to do an estate return, and do a valuation of all of their properties; a lot of them are businesses that they could get valuations to show they’ve lost money … and getting refunds if they have losses.”

The WSJ article “correctly states that some billionaires could end up receiving huge tax refunds when property values suffer losses,” Slott said. “That won’t play well politically. And then there is the burden of valuation, which gets more difficult when there is more property to value and when more of it is tied up in a business that might not be as valuable when passing to the next generation or that might lose value to new industry advances or a change in market conditions. Then who will determine and/or litigate these valuations? The ultra-wealthy will have scores of valuation experts that will outgun IRS.”

Wyden’s billionaire plan is more politically palatable than the Democrats’ earlier plan to eliminate the step-up in basis on assets at death, Slott said. Wyden’s plan is for “billionaires only; they don’t say how much, but that really separates wheat from the chaff; it’s not regular people. That’s why it might be an easy sell.”

That said, “Imagine going through Warren Buffett’s or Bill Gates’ holdings every year,” Slott said. “It sounds good, but I don’t see how it’s going to be put into practice.”

Slott reiterated his belief that the step-up in basis rules will survive.

“My views have not changed on this. I still believe the step-up rules will survive, even more so now that the House bill dropped the elimination because they didn’t have the support,” Slott said. “The Senate will likely go the same way.”

Eliminating the tax-free step-up in basis, Slott continued, “would snare too many unintended targets, like property and homeowners and especially small business owners wishing to pass their business to their children.”


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