Estate Tax Increase on the Middle Class

Nathan Newman nathan.newman at
Wed Aug 2 08:13:34 PDT 2000

Hey Max (and anybody else),

As I understand it, the estate tax "cut" includes its elimination for the richest 2% but also includes the elimination of "stepped up basis", meaning the end of the practice of passing on the increased value of stock tax free to hiers and starting the clock on capital gains at its value then. With the new system, as I understand it, the heirs will have to pay capital gains based on its increase in value from when the deceased first bought it.

If this is accurate, won't this make the estate tax "cut" really an increase in taxes on middle class inheritors who always received their shares not only tax free but with reduced potential capital gains.

And if true, why aren't the GOP and Dem backers of this plan getting slammed for screwing the middle class with a tax increase?

Of course, in the abstract, getting rid of stepped-up basis is the right thing to do, but doing so through abolishing the estate tax seems a pretty bad exchange.

-- Nathan Newman

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