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I need to read more into that. If true, the cost basis should only be stepped up such that it accounts for the estate tax. I'd prefer some simpler overall appr

I need to read more into that. If true, the cost basis should only be stepped up such that it accounts for the estate tax. I'd prefer some simpler overall approach though. Removing step up in cost basis alone obviates the need for an estate tax, as eventually assets would be sold and tax revenue generated. But important to do some research into how often inherited assets are kept permanently and gains never realized (thus tax never paid). Just on gut instinct, I would guess most who inherit wealth eventually sell off any assets. I recall it tends to be that most accumulated wealth is lost by the third generation.

WalterBright 5y ago
> thus tax never paid The estate tax is still due. The federal estate tax is 40%.
- adam_arthur 5y ago
  I was saying, in a world without an estate tax. If you could remove estate tax and cover by removing step up in cost basis, is probably preferable (but contingent on assets eventually getting sold, requires some research)
  - PaulDavisThe1st 5y ago
    For almost every US person, it IS a world without an estate tax. Nobody pays that in 2021 without an estate worth more than US$11.7M
    - WalterBright 5y ago
      The figure is $2,193,000 for Washington State. Considering that even starter houses are over a million bucks here, I bet that sweeps in quite a bit more than "nobody".
      - MisterBastahrd 5y ago
        The median house price in Washington State is $450K. If you have another $1.7M in assets when you die, you died rich.
      - PaulDavisThe1st 5y ago
        ... with rates at most half the 40% being cited here for federal estate tax. State policies differ, indeed. Almost all discussion of estate taxes in this thread has focused on or been exclusive to the federal estate tax.
        WalterBright 5y ago
        20% is still far from "a world without an estate tax".
        PaulDavisThe1st 5y ago
        WA state has a population of about 8M. Its citizens decided in 1981 to switch from an inheritance tax to an estate tax. This citizen-driven state law affects slightly more than 2% of the US population, in theory. In fact, median household income for WA in 2019 was about $78k, median household net worth in 2019 was about $400k, and median family net worth in WA in 2021 was $865k. So in reality, even within WA state, almost nobody is paying the state estate tax. Here's the Seattle Times from 2019 on the incongruities in state wealth distribution. But notice that even in their numbers, home owner median net worth is still only $900k, less than half the state's estate tax threshold. https://www.seattletimes.com/seattle-news/data/seattle-household-net-worth-ranks-among-top-in-nation-but-wealth-doesnt-reach-everyone/ https://www.seattletimes.com/seattle-news/data/seattle-house...
        WalterBright 5y ago
        The cited article has zero information on what percentage of Washingtonians die with more than $2,000,000 estate value. Drawing a conclusion that it is "almost nobody" is completely unwarranted.
- PaulDavisThe1st 5y ago
  Almost nobody pays the estate tax. >When a person dies, their assets could be subject to estate taxes and inheritance taxes, depending on where they lived and how much they were worth. While the threat of estate taxes and inheritance taxes does exist, in reality, the vast majority of estates are too small to be charged a federal estate tax—which, as of 2021, applies only if the assets of the deceased person are worth $11.70 million or more (Investopedia; https://www.investopedia.com/articles/personal-finance/120715/estate-taxes-who-pays-what-and-how-much.asp https://www.investopedia.com/articles/personal-finance/12071...)
  - WalterBright 5y ago
    > applies only if the assets of the deceased person are worth $11.70 million or more And hence they apply to billionaires, which is the topic of this page.
    - PaulDavisThe1st 5y ago
      Actually most billionaires manage to reshuffle their assets to that their estate, such as it is, is under the limit by the time they die. The main people hit by it are those holding large amounts of valuable land, and there are very few of them. Almost all mentions of the estate tax in this thread has been generic whining about the fact that there is an estate tax. For almost all US persons, there is no estate tax.
      - rsj_hn 5y ago
        > Actually most billionaires manage to reshuffle their assets I was talking to some people sufficiently wealthy that this is a concern, and their point is that the only reason some don't transfer their assets like this is fear of their own children. Unless you really are a farmer, or small business owner, the estate tax is completely optional if you trust your kids. In 2019, there were only 2,570 estate taxes filed. > Almost all mentions of the estate tax in this thread has been generic whining about the fact that there is an estate tax There is also whining among people that they need to spend so much on accountants and lawyers to avoid what is essentially a completely bypassable tax. So you can see how socially it is not a good use of our human capital to create this enormous tax avoidance industry, and how it would be much better to pass laws that didn't need to do things like value privately held businesses or artwork in order to determine your tax liability.

WalterBright 5y ago

> thus tax never paid The estate tax is still due. The federal estate tax is 40%.

adam_arthur 5y ago
I was saying, in a world without an estate tax. If you could remove estate tax and cover by removing step up in cost basis, is probably preferable (but contingent on assets eventually getting sold, requires some research)
- PaulDavisThe1st 5y ago
  For almost every US person, it IS a world without an estate tax. Nobody pays that in 2021 without an estate worth more than US$11.7M
  - WalterBright 5y ago
    The figure is $2,193,000 for Washington State. Considering that even starter houses are over a million bucks here, I bet that sweeps in quite a bit more than "nobody".
    - MisterBastahrd 5y ago
      The median house price in Washington State is $450K. If you have another $1.7M in assets when you die, you died rich.
    - PaulDavisThe1st 5y ago
      ... with rates at most half the 40% being cited here for federal estate tax. State policies differ, indeed. Almost all discussion of estate taxes in this thread has focused on or been exclusive to the federal estate tax.
      - WalterBright 5y ago
        20% is still far from "a world without an estate tax".
        PaulDavisThe1st 5y ago
        WA state has a population of about 8M. Its citizens decided in 1981 to switch from an inheritance tax to an estate tax. This citizen-driven state law affects slightly more than 2% of the US population, in theory. In fact, median household income for WA in 2019 was about $78k, median household net worth in 2019 was about $400k, and median family net worth in WA in 2021 was $865k. So in reality, even within WA state, almost nobody is paying the state estate tax. Here's the Seattle Times from 2019 on the incongruities in state wealth distribution. But notice that even in their numbers, home owner median net worth is still only $900k, less than half the state's estate tax threshold. https://www.seattletimes.com/seattle-news/data/seattle-household-net-worth-ranks-among-top-in-nation-but-wealth-doesnt-reach-everyone/ https://www.seattletimes.com/seattle-news/data/seattle-house...
        WalterBright 5y ago
        The cited article has zero information on what percentage of Washingtonians die with more than $2,000,000 estate value. Drawing a conclusion that it is "almost nobody" is completely unwarranted.
PaulDavisThe1st 5y ago
Almost nobody pays the estate tax. >When a person dies, their assets could be subject to estate taxes and inheritance taxes, depending on where they lived and how much they were worth. While the threat of estate taxes and inheritance taxes does exist, in reality, the vast majority of estates are too small to be charged a federal estate tax—which, as of 2021, applies only if the assets of the deceased person are worth $11.70 million or more (Investopedia; https://www.investopedia.com/articles/personal-finance/120715/estate-taxes-who-pays-what-and-how-much.asp https://www.investopedia.com/articles/personal-finance/12071...)
- WalterBright 5y ago
  > applies only if the assets of the deceased person are worth $11.70 million or more And hence they apply to billionaires, which is the topic of this page.
  - PaulDavisThe1st 5y ago
    Actually most billionaires manage to reshuffle their assets to that their estate, such as it is, is under the limit by the time they die. The main people hit by it are those holding large amounts of valuable land, and there are very few of them. Almost all mentions of the estate tax in this thread has been generic whining about the fact that there is an estate tax. For almost all US persons, there is no estate tax.
    - rsj_hn 5y ago
      > Actually most billionaires manage to reshuffle their assets I was talking to some people sufficiently wealthy that this is a concern, and their point is that the only reason some don't transfer their assets like this is fear of their own children. Unless you really are a farmer, or small business owner, the estate tax is completely optional if you trust your kids. In 2019, there were only 2,570 estate taxes filed. > Almost all mentions of the estate tax in this thread has been generic whining about the fact that there is an estate tax There is also whining among people that they need to spend so much on accountants and lawyers to avoid what is essentially a completely bypassable tax. So you can see how socially it is not a good use of our human capital to create this enormous tax avoidance industry, and how it would be much better to pass laws that didn't need to do things like value privately held businesses or artwork in order to determine your tax liability.