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I think this is the right analysis. If Bezos has sold all that stock the day before he died, he would have owed capital gains on it and the remainder would be i

I think this is the right analysis. If Bezos has sold all that stock the day before he died, he would have owed capital gains on it and the remainder would be inherited. That's roughly the same situation as described with the liquidity event moved a few days yet it's not "double taxation".

jkhdigital 5y ago
No that’s just bad estate planning… kind of like how a pair of rich siblings could gift each other $1 million and it would be taxed as income for both despite neither experiencing any change in wealth. Income taxation is impossible to implement without logical inconsistencies.
- loeg 5y ago
  > how a pair of rich siblings could gift each other $1 million and it would be taxed as income for both despite neither experiencing any change in wealth No. Gift taxes are paid by the gifter. Gifts are not income for the recipient. Additionally, there are annual and lifetime exclusions for gift tax.
  - dragonwriter 5y ago
    > Gifts are not income for the recipient. They manifestly are income for the recipient. They aren't taxed as such, though, because undertaxing income through generational wealth transfer is how you preserve a privileged elite. > Additionally, there are annual and lifetime exclusions for gift tax. The annual per-recipient limits are large, only amounts over them count against the lifetime limit, and the lifetime limit is enormous.
  - jkhdigital 5y ago
    Yeah as soon as I wrote that I looked at the gift tax rules and shrugged. Either way, both gifts are being “taxed” although the arcane gift tax rules seem to imply that no actual tax will be paid unless and until one of them reaches the lifetime threshold of ~$11M.
WalterBright 5y ago
Of course it's double taxation.
md_ 5y ago
Moreover, if Bezos had earned that as income instead of capital gains, it would have been “doubly taxed” upon inheritance; in effect, this rule (as with many others) merely excludes capital gains from taxes that apply to earned income. The argument that the step up basis avoids double taxation appears to be slight of hand. By the same rationale, you should earn a tax credit for sales taxes paid during the tax year.

jkhdigital 5y ago

No that’s just bad estate planning… kind of like how a pair of rich siblings could gift each other $1 million and it would be taxed as income for both despite neither experiencing any change in wealth. Income taxation is impossible to implement without logical inconsistencies.

loeg 5y ago
> how a pair of rich siblings could gift each other $1 million and it would be taxed as income for both despite neither experiencing any change in wealth No. Gift taxes are paid by the gifter. Gifts are not income for the recipient. Additionally, there are annual and lifetime exclusions for gift tax.
- dragonwriter 5y ago
  > Gifts are not income for the recipient. They manifestly are income for the recipient. They aren't taxed as such, though, because undertaxing income through generational wealth transfer is how you preserve a privileged elite. > Additionally, there are annual and lifetime exclusions for gift tax. The annual per-recipient limits are large, only amounts over them count against the lifetime limit, and the lifetime limit is enormous.
- jkhdigital 5y ago
  Yeah as soon as I wrote that I looked at the gift tax rules and shrugged. Either way, both gifts are being “taxed” although the arcane gift tax rules seem to imply that no actual tax will be paid unless and until one of them reaches the lifetime threshold of ~$11M.

WalterBright 5y ago

Of course it's double taxation.

md_ 5y ago

Moreover, if Bezos had earned that as income instead of capital gains, it would have been “doubly taxed” upon inheritance; in effect, this rule (as with many others) merely excludes capital gains from taxes that apply to earned income. The argument that the step up basis avoids double taxation appears to be slight of hand. By the same rationale, you should earn a tax credit for sales taxes paid during the tax year.