What is the proposed Biden 'death tax'?

PRESIDENT Joe Biden has recently proposed a tax increase on people earning more than $400,000 a year.

Biden's recent tax increase proposal has been nicknamed "death tax" by some.

What is the proposed Biden 'death tax'?

As he's announced his recent tax proposal, the president pledged not to raise taxes for Americans earning less than $400,000.

Biden campaigned on a platform that promised to increase the federal tax rate for those earning more than $400,000 from 37 percent to 39.6 percent. 

He also campaigned on an increase in the corporate tax rate from 21 percent to 28 percent. 

It would reverse some of the tax cuts granted to corporations by former president Donald Trump in 2017.

Heads of households earning more than $481,000 and married individuals filing separate tax returns with income over $254,650 would also pay the higher rate.

Biden acknowledged that he will struggle to get any Republican support for an increase in federal taxes, but remains sure of Democratic supporters. 

For properties worth more than $11.7million, capital gains tax is imposed on the increase in value of the home.

But, Biden wants to reduce that threshold to $1million, Mail Online reports.

Hank Adler, an associate professor of Chapman University, and attorney Madison Spach told The Wall Street Journal: “The American Families Plan as proposed would impose a new death tax that would punish middle-class individuals who chose to invest in America and leave something for their children rather than spend every dollar.

"The plan does not move the goalposts. It totally changes the rules of the game."

The authors of the study used a hypothetical story of a young widow who had bought a New York home decades ago for $250,000.

The home, now worth $2.5million, was the only asset at the time of her death.

There is a difference of $2.25million in the value of the property and there is a $1.25million exemption for single homeowners.

Around $1million would be taxed at a rate of 40.8 percent, meaning her kids would have a bill of $408,000.

Meanwhile, the only two assets of the Biden's subject to capital gains tax at death would be their homes.

The couple bought a home in Wilmington, Delaware for $350,000, and their Rehoboth Beach property cost $2.7million.

The rise in value is likely to be less than the $2.5million exemption allowed for a married couple meaning the estate wouldn't be hit.

It comes after Biden told Americans earning less than $400,000 would not see a tax hike to fund infrastructure projects worth over $4trillion.

What did Biden say about the tax increase proposal?

In an interview with ABC in March, Biden hit out at Republicans criticizing the tax breaks included in his $1.9trillion Covid relief package.

The president said that he was focusing on giving tax breaks to the bottom 60 percent of the population, while the GOP is only interested in “the Trump tax cut where 83 percent went to the top 1 percent of people in America.”  

"If we just took the tax rate back to what it was when (George W) Bush was president, top rate paid 39.6 percent in federal tax, that would raise $230 billion,” Biden noted. 

“Yet they're complaining because I'm providing a tax credit for child care? For the poor? For the middle class?" 

White House Press Secretary Jen Psaki later reiterated Biden’s comments that the top 10 percent need to be paying more. 

She said that the president believes "those at the top are not doing their part" and "obviously that corporations could be paying higher taxes."

In April, Biden proposed a capital gains hike of nearly 20 percent on Americans earning more than $1million per year.

The White House proposed the increase to help pay for the American Families Plan.

Source: Read Full Article