Comment by jermaustin1 4 days ago
> The US should also get rid of the step up in basis at death.
This would actually fix the issue without my suggestion, but it is a harder pill to swallow for the "soon to be rich" Americans that tend to vote against their current economic interests.
It is a real problem but its presented in a misleading way.
If you inherit a farm worth 1m and you have to pay estate taxes on that of 100k. You do not have to sell the farm, you can instead take out a mortgage to cover that 100k.
When we frame it that we its still very fair to the person inheriting the farm because who wouldnt want a $1m farm for 100k.
In American maybe thats the case. Im talking about situations where we are trying to implement an estate tax and the discussion is framed as basically forcing the receiver to sell the estate to pay the tax instead of presenting it accurately as taking a small loan to pay the tax.
You fix it by sidestepping it. Don't do it, even though it is the simplest/easiest to implement, and instead create 5 other laws that surround it and accomplish the same goal. Loop the hole back a them.
That classic argument for step up is that a farmer’s son inheriting the farm suddenly owes a lot of taxes which he can’t pay without selling the farm.
Is this a real problem? And how do we fix that?