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The obvious fix is to not step up basis on death. The estate tax already means that the estate of a person who dies may need to sell / divide / split stuff to

The obvious fix is to not step up basis on death. The estate tax already means that the estate of a person who dies may need to sell / divide / split stuff to pay the government. There already is no fundamental protection for an asset passing unscathed from a parent to a child. I don't see how not stepping up basis qualitatively changes this. And your argument of "you want a child to be able to inherit a family business / house and keep the family business protected" is incredibly axiomatic and the antithesis of a tax. While it's inherently consistent, you're making the same general argument as "all taxes are theft". Yes taxes may be theft in one view, but under our current society, raising revenue for the common welfare is also a virtue, so we can't have have it both ways.

geysersam 2y ago
It's a funny argument the one about the family farm. In this case it's not even about inheritance tax. It's a sob story about a guy who couldn't inherit the farm because his dad owed the state money because they had let him not pay tax on his capital gains for a long time. Sorry for not tearing up.
- gammarator 2y ago
  It also rarely applies to farms. https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threatens-small-farms https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa...
- Rebelgecko 2y ago
  When should he have paid his capital gains tax? Had the farm changed hands back and forth?
- _bin_ 2y ago
  You can't just arbitrarily set the status quo that way, can't just sneak a premise that the state has default a right to collect a piece of arbitrary appreciation on an asset (as all assets are used for speculation) when the owner hasn't actually gotten cash from that, and that any government that doesn't tax that is just cutting someone a break on something rightfully owed. The state of nature is no tax, and as it's unpleasant, we create societies and fund them with taxes that we must deliberate and determine to be just and reasonable. You don't get to argue from the point that your preferred taxation regime is simply how things should be and that how things are is therefore wrong, especially not without a justification. I'd also point out that people's assets have gone up in nominal terms in the past few years, but for many that's not reflective of an increase in purchasing power. Much of that increase is due to excess inflation from the profligate overspending of our past two administrations, so the cycle currently looks like this: government prints money and causes inflation -> your assets are "worth more" -> taxman says "give me a piece of that" even though your real wages have fallen or have just barely recovered to pre-2020 levels. And of course, even if we index to inflation, that will necessarily hit the poor harder: food and energy are deemed "too volatile" to include in headline CPI, but as necessities, they comprise a larger part of poor households' spending and so inflation will hit them harder than the numbers suggest.
  - Log_out_ 2y ago
    yes, we can. the whole premise of a democracy is that every law is a solid majority away from being turned over.one of the reasons big money is inherent anti-democratic.
    - _bin_ 2y ago
      Okay, I don't actually believe in that form of democracy. Not all things that are legal are good, therefore we should set constraints on what the majority can do. I'd describe your system as closer to mob rule. And no, that is not the premise of every system that incorporates democracy as an element, it's the premise of an absolute democracy.
      - FactKnower69 2y ago
        >I'd describe your system as closer to mob rule. lmfao this is always, always, always the refrain
      - jjav 2y ago
        > therefore we should set constraints on what the majority can do Which inevitably leads to the question: who should get the power to do that and why they, specifically?
        pdonis 2y ago
        You have it backwards. The actual question is, how did the majority magically get the power to enforce its will on the minority in the first place?
        kjkjadksj 2y ago
        The majority held this power as long as we’ve been a social species. Even a Pharaoh lives with consent of the majority even if they’ve convinced that majority they are divine.
- MisterBastahrd 2y ago
  Not even sure why I should be upset in the first place. If I get fired from my job, nobody is going to run to my aid crying that I deserved that job because my daddy worked really hard to put me through school (he didn't, but that's besides the point) and he wanted me to have it. No, I just get fired. How is a family farm any different? It's just an asset. Birthrights shouldn't exist past citizenship.
  - lazide 2y ago
    Because the idea of leaving something to your kids (and a legacy beyond oneself) is a fundamental motivator for most people?
    - SR2Z 2y ago
      Boo. That's not what's at stake here; people don't wanna pay taxes that are fairly owed to the government.
      - Slava_Propanei 2y ago
        The asset has not moved outside the family, has not been sold, no profit on sale has been realized. You think a profit transfer has been made, because you think in terms of atomized individuals with no family.
        MisterBastahrd 2y ago
        Citizens are taxed as individuals, not families. A person did not have assets, and now they do. I don't care that the land was "in their family." If they are even decent at managing their assets, then they will have more assets when they die than when their parents did. And if they don't, then it's not my concern. I don't believe in government policies to perpetuate generational capital wealth, and I will vote against them as long as we have a system where money can be used to influence the government.
        2y ago
- mensetmanusman 2y ago
  Yes, let’s implement this so that all farms are owned by large corporations.
_bin_ 2y ago
There's also no fundamental reason for the state to institute any form of estate tax; on the contrary, I specified it goes against our usual federal regime of taxing value as it's moved rather than value at rest. If anything, I'd question why you believe there's some inherent reason or right to have any form of estate tax, let alone to the point one forces liquidation of assets. One form of taxation can be more or less just than another and it's much easier to make the moral case for using force to collect a portion of value moved through government infrastructure (banking system, roads, ports, etc.) than something that remains unsold. I didn't say taxation is theft and would rather you didn't put words in my mouth. You're assuming I'm against any form of taxation whatsoever on a moral basis, which isn't actually true. I think there are values reasons (most of us actually like the idea of a family business staying in a family, not getting sold to private equity) and moral reasons why we should continue resetting the tax basis of inherited assets. As a compromise position, I think it would be more reasonable for you to suggest removing the stepped-up basis but not counting inheritance as a taxable event.
- pintxo 2y ago
  I don’t get you intro argument. An estate tax is like the poster child of value moved: from the parents to the children. In contrast to a wealth tax.
  - mbrumlow 2y ago
    I can see the reasoning. But the value did not really move. As the estate is family owned. The family did not die, a member of it did.
    - dwater 2y ago
      Seems like splitting hairs to me. If the estate is put into an LLC or similar then the death of a member doesn't involve movement of money. If the estate is owned by an individual and then inherited by their beneficiary then money moved from the deceased to the living. The Family is not a legal unit; the beneficiary doesn't have direct benefit of ownership while the owner of the estate lives.
tim333 2y ago
I'm not sure that's a very good fix because the data of how much was paid for the assets may not be available after their owner is dead. The system in the UK seems to work ok for the most part. No CGT on death (the equivalent of step up basis in the US) but 40% inheritance tax on most of the assets over £325K. We do have the odd exemptions like Clarkson's Farm which was bought partly for inheritance tax avoidance, but you don't have to do that.
- eli 2y ago
  What would the owner have done if they decided to sell the assets shortly before death? Either they can establish a cost basis, or the basis is assumed to be $0. I don't see why this is a big problem.
  - tim333 2y ago
    It's enough of a hassle acting as an executor when your parents die without that on top.
svara 2y ago
> The obvious fix is to not step up basis on death. And that's how it's done in many parts of the world, works perfectly fine. There's really no reason to step up basis except to provide that loophole, which is probably exactly the reason it's done.

geysersam 2y ago

It's a funny argument the one about the family farm. In this case it's not even about inheritance tax. It's a sob story about a guy who couldn't inherit the farm because his dad owed the state money because they had let him not pay tax on his capital gains for a long time. Sorry for not tearing up.

gammarator 2y ago
It also rarely applies to farms. https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threatens-small-farms https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa...
Rebelgecko 2y ago
When should he have paid his capital gains tax? Had the farm changed hands back and forth?
_bin_ 2y ago
You can't just arbitrarily set the status quo that way, can't just sneak a premise that the state has default a right to collect a piece of arbitrary appreciation on an asset (as all assets are used for speculation) when the owner hasn't actually gotten cash from that, and that any government that doesn't tax that is just cutting someone a break on something rightfully owed. The state of nature is no tax, and as it's unpleasant, we create societies and fund them with taxes that we must deliberate and determine to be just and reasonable. You don't get to argue from the point that your preferred taxation regime is simply how things should be and that how things are is therefore wrong, especially not without a justification. I'd also point out that people's assets have gone up in nominal terms in the past few years, but for many that's not reflective of an increase in purchasing power. Much of that increase is due to excess inflation from the profligate overspending of our past two administrations, so the cycle currently looks like this: government prints money and causes inflation -> your assets are "worth more" -> taxman says "give me a piece of that" even though your real wages have fallen or have just barely recovered to pre-2020 levels. And of course, even if we index to inflation, that will necessarily hit the poor harder: food and energy are deemed "too volatile" to include in headline CPI, but as necessities, they comprise a larger part of poor households' spending and so inflation will hit them harder than the numbers suggest.
- Log_out_ 2y ago
  yes, we can. the whole premise of a democracy is that every law is a solid majority away from being turned over.one of the reasons big money is inherent anti-democratic.
  - _bin_ 2y ago
    Okay, I don't actually believe in that form of democracy. Not all things that are legal are good, therefore we should set constraints on what the majority can do. I'd describe your system as closer to mob rule. And no, that is not the premise of every system that incorporates democracy as an element, it's the premise of an absolute democracy.
    - FactKnower69 2y ago
      >I'd describe your system as closer to mob rule. lmfao this is always, always, always the refrain
    - jjav 2y ago
      > therefore we should set constraints on what the majority can do Which inevitably leads to the question: who should get the power to do that and why they, specifically?
      - pdonis 2y ago
        You have it backwards. The actual question is, how did the majority magically get the power to enforce its will on the minority in the first place?
        kjkjadksj 2y ago
        The majority held this power as long as we’ve been a social species. Even a Pharaoh lives with consent of the majority even if they’ve convinced that majority they are divine.
MisterBastahrd 2y ago
Not even sure why I should be upset in the first place. If I get fired from my job, nobody is going to run to my aid crying that I deserved that job because my daddy worked really hard to put me through school (he didn't, but that's besides the point) and he wanted me to have it. No, I just get fired. How is a family farm any different? It's just an asset. Birthrights shouldn't exist past citizenship.
- lazide 2y ago
  Because the idea of leaving something to your kids (and a legacy beyond oneself) is a fundamental motivator for most people?
  - SR2Z 2y ago
    Boo. That's not what's at stake here; people don't wanna pay taxes that are fairly owed to the government.
    - Slava_Propanei 2y ago
      The asset has not moved outside the family, has not been sold, no profit on sale has been realized. You think a profit transfer has been made, because you think in terms of atomized individuals with no family.
      - MisterBastahrd 2y ago
        Citizens are taxed as individuals, not families. A person did not have assets, and now they do. I don't care that the land was "in their family." If they are even decent at managing their assets, then they will have more assets when they die than when their parents did. And if they don't, then it's not my concern. I don't believe in government policies to perpetuate generational capital wealth, and I will vote against them as long as we have a system where money can be used to influence the government.
        2y ago
mensetmanusman 2y ago
Yes, let’s implement this so that all farms are owned by large corporations.

_bin_ 2y ago

There's also no fundamental reason for the state to institute any form of estate tax; on the contrary, I specified it goes against our usual federal regime of taxing value as it's moved rather than value at rest. If anything, I'd question why you believe there's some inherent reason or right to have any form of estate tax, let alone to the point one forces liquidation of assets. One form of taxation can be more or less just than another and it's much easier to make the moral case for using force to collect a portion of value moved through government infrastructure (banking system, roads, ports, etc.) than something that remains unsold. I didn't say taxation is theft and would rather you didn't put words in my mouth. You're assuming I'm against any form of taxation whatsoever on a moral basis, which isn't actually true. I think there are values reasons (most of us actually like the idea of a family business staying in a family, not getting sold to private equity) and moral reasons why we should continue resetting the tax basis of inherited assets. As a compromise position, I think it would be more reasonable for you to suggest removing the stepped-up basis but not counting inheritance as a taxable event.

pintxo 2y ago
I don’t get you intro argument. An estate tax is like the poster child of value moved: from the parents to the children. In contrast to a wealth tax.
- mbrumlow 2y ago
  I can see the reasoning. But the value did not really move. As the estate is family owned. The family did not die, a member of it did.
  - dwater 2y ago
    Seems like splitting hairs to me. If the estate is put into an LLC or similar then the death of a member doesn't involve movement of money. If the estate is owned by an individual and then inherited by their beneficiary then money moved from the deceased to the living. The Family is not a legal unit; the beneficiary doesn't have direct benefit of ownership while the owner of the estate lives.

tim333 2y ago

I'm not sure that's a very good fix because the data of how much was paid for the assets may not be available after their owner is dead. The system in the UK seems to work ok for the most part. No CGT on death (the equivalent of step up basis in the US) but 40% inheritance tax on most of the assets over £325K. We do have the odd exemptions like Clarkson's Farm which was bought partly for inheritance tax avoidance, but you don't have to do that.

eli 2y ago
What would the owner have done if they decided to sell the assets shortly before death? Either they can establish a cost basis, or the basis is assumed to be $0. I don't see why this is a big problem.
- tim333 2y ago
  It's enough of a hassle acting as an executor when your parents die without that on top.

svara 2y ago

> The obvious fix is to not step up basis on death. And that's how it's done in many parts of the world, works perfectly fine. There's really no reason to step up basis except to provide that loophole, which is probably exactly the reason it's done.