Graeme Sloan/Sipa USA via AP Images
Rep. Richard Neal (D-MA) during a press conference at the U.S. Capitol, March 9, 2021.
President Biden plans an expansive tax package that includes both higher rates on the rich and much more muscular tax enforcement. His plan would double the IRS enforcement staff, targeting wealthy tax evaders. That would bring in an estimated $700 billion over a decade.
But the plan also calls for other reforms. One central measure, long sought by progressives, is to close the loophole in the estate tax known as the “step-up in basis.” Under present law, if the heirs of an investor inherit stock that has appreciated in value over decades, the capital gains tax that would otherwise be owed is washed away.
Biden proposes to close that loophole, both as elementary fairness and as a revenue raiser. The Urban-Brookings Tax Policy Center estimates the likely revenue as $370 billion over ten years.
But according to Bloomberg, Rep. Richie Neal, the powerful chair of the House Ways and Means Committee, has floated the idea through his senior staff of allowing heirs to pay no capital gains tax as long as they don’t sell the stock.
Those heirs could then pass the stock down to their heirs, and the capital gains tax would never be paid. Since stock ownership is so highly concentrated, this is primarily a benefit for the rich.
Neal in a statement tried to walk back his staff comments, made in a call with tax experts and progressive groups, as just one option among many. “I’ve been very clear that no decisions have been made on this subject,” he said in a statement.
Though Joe Manchin has also suggested weakening some aspects of Biden’s tax reform efforts, my sources say the administration is more worried about Neal. As well they should be.
