Estate Tax Increase on the Middle Class

[Max Sawicky]

. . .
My point is that for the 98% of estates that have no estate tax, this bill
will mean essentially a tax increase whereever stock or other capital
goods are passed on, since before the whole amount was passed on tax-free
with a stepped-up basis.  It seems like this bill is a complete tax loser
for all estates other than the top 2% of estates.

Or am I missing something where those bottom 98% of estates gain anything
from this bill?   -- Nathan

YOur description is accurate.  In isolation, the
change is a tax increase, but its incidence would
mirror that of the existing capital gains tax, which
is strongly progressive.

The Right likes to quote statistics about the number
of persons who pay *some* capital gains tax, in keeping
with the dispersion of stock ownership, but the bulk of
actual revenues are surrendered by higher-income persons.

We are talking about two different taxes here.  The
carry-over pertains to the income tax.  The 'bottom
98%' of estates is not the same as the bottom 98
percent in terms of income.  While most of the top
two percent of estates are probably in the top one
or two percent in terms of income, many in that same
group who did not receive an estate are high in terms
of other income.

Most recent work on this is by Leonard Burman in a book
and also in a paper that can be downloaded free from the
Urban Institute web site.

max