ECON Biden’s estate tax changes will wipe out millions of small businesses: Norquist

[20Gauge]

Biden’s estate tax changes will wipe out millions of small businesses: Norquist

Americans for Tax Reform President Grover Norquist on President Biden considering increasing estate taxes.

www.foxbusiness.com

President Biden's proposed changes to estate taxes will be "the destruction" of "millions" of small businesses, Americans for Tax Reform President Grover Norquist told FOX Business' Stuart Varney on Monday.

GROVER NORQUIST: Well, they're doing two things. Yes, they want to increase the death tax, but they're also putting in a second death tax, which is eliminating the stepped-up basis at death. So when somebody passes on a farm, a small business, a home to a son or daughter, they would that the recipient would have to pay the capital gains that had accumulated during their parents' life and pay it immediately, not when they sell the house, not when they sell the business.

…

Think about what Biden's doing. This is an idea that they passed in 1976. It was such a bad idea that they never quite implemented it because they couldn't figure out how to do it. And in 1980, a Democratic House, a Democratic Senate and a Democratic president got rid of it. Biden, new thinker, bipartisan, wants to go back to something that the Democrats recognized was a disaster back in the 70s. And imagine how this would be the destruction of small businesses and family farms across the country.


All it would need is 50 votes. They will do it through reconciliation. The Democrats have said that's their plan. If one or two senators say this tax is too destructive, if Schumer talks to people in New York, if the Democrat senators in Vermont actually talk to small business and vote like, I'm sorry, not for nothing Vermont, Virginia, you could stop it, but it would take some very brave Democratic senators who haven't shown up yet to stop it in reconciliation.

 

[20Gauge]

We have spoken about this in the past, but it does seem to be a case of it really happening this year.

They are not holding back.

So those of us who receive property, (like the parent's house) when they die in the past would have the basis / value of the home be that at the time of death. If you then sell it, you have a minimal or no tax liability.

In this case, if you got momma's house and sold if for 100k, you in the past would have had no tax obligation, but now you would owe CAPITAL GAINS tax of up to the 43.4% for the 100k profit that Feds say you have.

BIG BIG difference. The inheiritance tax has no meaning under this change in the law.

 

[Keric4]

So, when I (and my siblings ) inherit my parents house / stocks etc, we have to pay the difference from what they paid for the house/stocks when they first bought it and what its worth now? Is that what Im understanding?

 

[desertvet2]

Total BULLSHIT!

THIS is why Americans cannot build family wealth.

Sick of all of these types of people.

We are NOT the land of the free.

 

[20Gauge]

So, when I (and my siblings ) inherit my parents house / stocks etc, we have to pay the difference from what they paid for the house/stocks when they first bought it and what its worth now? Is that what Im understanding?

Not 100% sure on that one.

There are two ways to approach this.

a) You have no basis as you did not actually buy the property, so it would be 100% of the sale minus expenses = capital gains
b) You can use the original purchase price as the basis, so it would be Sale minus basis minus expenses = capital gains.

Which will they do? Who knows.

 

[20Gauge]

Total BULLSHIT!

THIS is why Americans cannot build family wealth.

Sick of all of these types of people.

We are NOT the land of the free.

There will be ways to minimize it, but in essence you are correct.

 

[bw]

The mass of wealth is in the middle class, and they want it, simple as that. Wealthy people have tax vehicles to avoid stuff like this.

 

[Bps1691]

Total BULLSHIT!

THIS is why Americans cannot build family wealth.

Sick of all of these types of people.

We are NOT the land of the free.

The elites have no problems passing down their unearned family wealth. The Kennedy clan still are rich several worthless generations after Joseph bootlegged, cheated in the stock markets and who knows how many more illegal make money schemes.

It's the little guy who worked his butt off to build the business whose hard work they don't want passed on to the family. Obama said it- you didn't build that. These leftist clowns really believe that they know better how to distribute your life's work to those who have done nothing.

 

[20Gauge]

All people see is the nice truck or the piece of property. They never see you working 12-14 hours a day, saving for years.

 

[Looks Harmless]

Freedom, like anything is a choice. It's an internal decision.
I choose freedom. They can build all the cages they want. My soul can slip through all of them.

 

[NoDandy]

Total BULLSHIT!

THIS is why Americans cannot build family wealth.

Sick of all of these types of people.

We are NOT the land of the free.

Agree !!!

IMHO, there should be NO inheritance tax !! Only those estates with powerful / slick lawyers & accountants ( mostly political class ) seem to escape it. It is a crock !!! Estates should not be taxed !!!!

 

[bw]

Estates should not be taxed !!!!

That's like telling an alcoholic to just drink a little less. The government can't help itself; it's drunk on the power to tax.

 

[SSTemplar]

Just killing what the lockdown didn’t.

 

[The Hammer]

Not 100% sure on that one.

There are two ways to approach this.

a) You have no basis as you did not actually buy the property, so it would be 100% of the sale minus expenses = capital gains
b) You can use the original purchase price as the basis, so it would be Sale minus basis minus expenses = capital gains.

Which will they do? Who knows.

My guess would be B, but that still could be egregious in many cases.

And it's also going to be an administrative nightmare. Imagine that the property left behind is securities, bought 50-60 years ago. In the case of incomplete or nonexistent records, who's gonna dig up the original cost? And you know that the IRS is famous for maintaining that if you can't prove basis, they can declare your basis as zero.

 

[20Gauge]

My guess would be B, but that still could be egregious in many cases.

And it's also going to be an administrative nightmare. Imagine that the property left behind is securities, bought 50-60 years ago. In the case of incomplete or nonexistent records, who's gonna dig up the original cost? And you know that the IRS is famous for maintaining that if you can't prove basis, they can declare your basis as zero.

Heck even if you can prove it they often declare the basis is zero.....lol

I am leaning towards item two also. There are methods to google historical stock prices so that may not be a major issue, but the property? Assets? Not likely.

 

[Kathy in FL]

There will be ways to minimize it, but in essence you are correct.

People need to start getting familiar with trusts and foundations. Or, people are going to have to accept that you are on your own and don't expect inheritance from family.

We purchased life insurance plans for our kids that accrues wealth. They weren't cheap but that will be their inheritance should the tax laws become even more onerous than they already are. We also have everything, including the LLCs and the Partnership in a trust structure. How that works out is going to be interesting.

We've been telling our kids we are going to spend it all before we pass so they better figure out their own lives. We hope that builds motivation and success-driven thinking/actions.

 

[UglyBird]

Plan B is a nightmare to my non-financial mind. What about things stock splits, reinvested dividends, different lot purchases over maybe 60 years? That's a lot of paper records to sort through, assuming they've been saved. Also, the brokerage companies have all merged and split up. Did all the details of those transactions get saved through the numerous company changes?

Plan A is even worse. I think that's going to be a 30% (more or less) slice right off the top. That puts you right into the case where you have to sell the family farm so you can pay the taxes to inherit it.

I sure hope they put a floor of some sort under this. What is it now, 11 million?

 

[20Gauge]

People need to start getting familiar with trusts and foundations. Or, people are going to have to accept that you are on your own and don't expect inheritance from family.

This is how rich people transfer wealth from one generation to the next.

We are no longer in the ERA of being able to use TurboTax to file your taxes. You need to plan plan and then plan some more. This requires professional help and you ALSO must educate yourself fully in the process. This would be the only way to successfully move wealth from one generation to the next.

Too many fail as people fail to follow through the entire process.

 

[20Gauge]

Plan B is a nightmare to my non-financial mind. What about things stock splits, reinvested dividends, different lot purchases over maybe 60 years? That's a lot of paper records to sort through, assuming they've been saved. Also, the brokerage companies have all merged and split up. Did all the details of those transactions get saved through the numerous company changes?

Plan A is even worse. I think that's going to be a 30% (more or less) slice right off the top. That puts you right into the case where you have to sell the family farm so you can pay the taxes to inherit it.

I sure hope they put a floor of some sort under this. What is it now, 11 million?

This actually would make the floor worthless.

Think about it, you can inherit, but must pay taxes on the capital gains first. Then you are not really inheriting, but rather selling assets, paying taxes and then be given the crumbs of a lifetime of effort if you are lucky.

 

[Kathy in FL]

This actually would make the floor worthless.

Think about it, you can inherit, but must pay taxes on the capital gains first. Then you are not really inheriting, but rather selling assets, paying taxes and then be given the crumbs of a lifetime of effort if you are lucky.

At the very least people need to start putting their homesteads in LLCs and then having that inside of an Trust with an estate plan that they keep updated.

 

[NoDandy]

This actually would make the floor worthless.

Think about it, you can inherit, but must pay taxes on the capital gains first. Then you are not really inheriting, but rather selling assets, paying taxes and then be given the crumbs of a lifetime of effort if you are lucky.

 

[The Hammer]

There's no way to make this tax plan look nice. It's one of the ugliest we've seen, and it's going to send people scrambling. Especially wealthy taxpayers really pay attention to estate planning, and you can bet they are going to be very busy getting as creative as possible to try to mitigate this nightmare...

 

[Bps1691]

All people see is the nice truck or the piece of property. They never see you working 12-14 hours a day, saving for years.

When I decided to get rid of my IT consultancy, go back to just me and a few other's like me working as a team independently, it was because of two things:

1. Ungrateful employees- I did without vacations and paid myself last and always took care of them. They didn't care and caused me constant grief with their demands. The tipping point came when a person I felt sorry for had lost their job and I found a contract for them. She worked one month at the clients before they canceled her contract. She sat on the bench for a year because every time I found a site for her she'd find something wrong with it or would fail the initial interview. She couldn't understand when I let her go. Had another that just decided they'd go out on their own and gave me a one week notice to replace them at a clients. Some of the stunts some of them pulled just made it a royal pain in the a**, because in the end I could make more just off myself in net income with out the grief. The extra just wasn't worth it.

2. Paperwork and taxes- I had an accountant and lawyer and each year as we grew their costs grew and the government took more to the point I finally had it.

I dissolved the corporation, had an auction to sell off all our assets and then distributed the money across all the stockholders. Two of the employees actually thought they should get their laptops and software licenses for nothing!

 

[20Gauge]

When I decided to get rid of my IT consultancy, go back to just me and a few other's like me working as a team independently, it was because of two things:

1. Ungrateful employees- I did without vacations and paid myself last and always took care of them. They didn't care and caused me constant grief with their demands. The tipping point came when a person I felt sorry for had lost their job and I found a contract for them. She worked one month at the clients before they canceled her contract. She sat on the bench for a year because every time I found a site for her she'd find something wrong with it or would fail the initial interview. She couldn't understand when I let her go. Had another that just decided they'd go out on their own and gave me a one week notice to replace them at a clients. Some of the stunts some of them pulled just made it a royal pain in the a**, because in the end I could make more just off myself in net income with out the grief. The extra just wasn't worth it.

2. Paperwork and taxes- I had an accountant and lawyer and each year as we grew their costs grew and the government took more to the point I finally had it.

I dissolved the corporation, had an auction to sell off all our assets and then distributed the money across all the stockholders. Two of the employees actually thought they should get their laptops and software licenses for nothing!

You have nailed it why we are a small family operation.

Item #1) Will never ever go away. It is a fact of 21st century life. No matter what you do, you are a Bast@rd.

Item #2) Prices are going up as the dollar goes down. Combine that with the new business mantra of raising prices annually if not sooner are what is causing personal services to cost so much.

We try to avoid raising our prices whenever possible. We did this year. Next year? We will need to add about 2% to the prices to account for insurance, software, etc. We are happy with that as rent used to be our driving factor, but we bought a building that so far is saving us a ton of cash.

Lastly, we also found that we are better off and get paid better without employees. It is no joke that for every $1 in salary costs you another $1 in costs.

 

[TxGal]

Well, we've talked about putting our place into a trust with the kids now that we're older (approaching 70). House and acreage paid for, a few other very small parcels that aggregate to 30+ acres, all under ag exemption. Land prices here have been jumping upward like crazy. Lots of folks from down Houston way mostly, coming in with money and driving up prices. I doubt we could afford to buy it at today's prices, most locals can't afford to buy locally anymore.

Guess we'd best meet with a trust attorney and get it done soonest.

 

[Tristan]

The mass of wealth is in the middle class, and they want it, simple as that. Wealthy people have tax vehicles to avoid stuff like this.

If there is accumulated wealth anywhere, they want it - or at least a major chunk of it at the very least.

Except for their own, or their friends, of course.

 

[Keric4]

We've been telling our kids we are going to spend it all before we pass so they better figure out their own lives. We hope that builds motivation and success-driven thinking/actions.

There is nothing written in stone that says we are required to leave our kids any kind of inheiretance (sp?). We"ve told our four not to expect much of anything. In fact Im actively trying to downsize our material possessions and go the minimal living route. I mean how many beer steins do you really need? Lol- yes my dh is German.

 

[UglyBird]

Absolutely. It makes retirement planning kind of difficult if they keep making major changes to the rules. In my case my parents have accumulated a decent nest egg to pass on. They won't even consider any LLC's or trusts because that costs money. I think there's a little life insurance in there but not much. They could gift 15k per year to the kids and grandkids, but that's not going to happen. They see no possibility that the government would ever do something like this. We're good for a decent retirement on our own, but I hate to see a big chunk of a lifetime's worth of savings get handed over to the government. They don't need it, they can print all they need.

 

[Intestinal Fortitude]

Total BULLSHIT!

THIS is why Americans cannot build family wealth.

Sick of all of these types of people.

We are NOT the land of the free.

it's called COMMUNISM

 

[Henry Bowman]

Just as a reminder, the American Revolution was started in part because of a 3 penny's on a pound of Tea tax.

Wonder what the founders would think of us today putting up with this?

 

[mikeabn]

The mass of wealth is in the middle class, and they want it, simple as that. Wealthy people have tax vehicles to avoid stuff like this.

Wealthy people also make campaign contributions which elect people who make laws.

 

[NoDandy]

That's like telling an alcoholic to just drink a little less. The government can't help itself; it's drunk on the power to tax.

Yes, they are drunk on power !

However, since the government is capable and willing to do what is wrong, because we cannot stop them, does not mean I cannot / should not point out they are wrong !!!

 

[ShadowMan]

And that is why you put EVERYTHING into a trust and only change the people administering the trust. No one inherits = No Capital Gains = Nothing to pay. "F" the IRS and Big Gub!!

 

[20Gauge]

Just as a reminder, the American Revolution was started in part because of a 3 penny's on a pound of Tea tax.

Wonder what the founders would think of us today putting up with this?

That's like millions in today's dollars..... wow tea was expensive...... <off>

 

[Wiley]

If only that extra death tax applied to the biden klan. I'd love to see that evil family lose 43% of their wealth the second the Senile Pedophile croaks.

Side note: I bet when biden dies finally, he'll do it while on his back with his arms and legs folded over his body like the cockroach that he is. Happy thoughts like that make me smile all day.

 

[20Gauge]

And that is why you put EVERYTHING into a trust and only change the people administering the trust. No one inherits = No Capital Gains = Nothing to pay. "F" the IRS and Big Gub!!

and know you know the reason such vehicles for money exist......

 

[rob0126]

Not 100% sure on that one.

There are two ways to approach this.

a) You have no basis as you did not actually buy the property, so it would be 100% of the sale minus expenses = capital gains
b) You can use the original purchase price as the basis, so it would be Sale minus basis minus expenses = capital gains.

Which will they do? Who knows.

If its not adjusted for inflation, then its just a way to steal everything eventually.

 

[20Gauge]

If its not adjusted for inflation, then its just a way to steal everything eventually.

That was the beauty of the stepped up basis. The day you inherit it, you sell it and no gains. Adjustments for inflation are not needed.

 

[rob0126]

That was the beauty of the stepped up basis. The day you inherit it, you sell it and no gains. Adjustments for inflation are not needed.

Makes me wonder how the inheritance tax ever came about without extreme pushback from the public.

Its anti biblical for one. (Proverbs 13:22)

 

[raven]

this is why wealthy elite, so called capitalist, businesses absolutely love socialism.
It eliminates the competition from small business
and it goes one step further . . . it allows the monopolistic oligarchy to buy up the "liberated" capital for pennies on the dollar because no one else is allowed to buy it