Taxing Inheritance Twice
A new report released by EY finds that repealing the step-up in basis tax provision would damage the gross domestic product (GDP) and significantly decrease job creation. The study was conducted for the Family Business Estate Tax Coalition, which includes almost 60 organizations representing family-owned businesses.
The EY study found middle-class, family-owned businesses would be particularly hard hit by the repeal. Currently, when someone inherits assets, they aren’t taxed on the appreciation that happened before they inherited them. If family-owned farms, small businesses or manufacturers are forced to pay capital gains accrued by the prior owner, they would likely face large tax bills that put the future of their business at risk.
According to the study’s findings, repealing the step-up in basis would result in:
* 80,000 fewer jobs in each of the first ten years;
* 100,000 fewer jobs each year thereafter; and
* A $32 reduction in workers’ wages for every $100 raised by taxing capital gains at death.
It would also reduce GDP relative to the U.S. economy in 2021, by approximately:
* $10 billion annually;
* $100 billion over 10 years.
“Repealing stepped-up basis is not a free lunch for those looking to generate tax revenue and would have significant consequences in the multifamily marketplace,” said Doug Bibby, President of the National Multifamily Housing Council.