As we reported in April, Joe Biden proposed the nearly $2 trillion American Families Plan, another perfect example of Democrats crafting a focus-group-driven name for yet another monstrous spending bill that would spell disaster for untold numbers of the very “American families” they claim the plan is designed to help. Nonetheless, an “investment in our kids, our families, and our economic future,” he called it.
Before we get into the details and all-but-certain disastrous impact of the bill, let’s talk about two of the Democrat Party’s longtime favorite go-to misnomers: “investment” and “fair share.”
The federal government does not invest money. The federal government spends money. Mostly, our money. Like drunken sailors. Money it either collects in tax revenue or borrows — the latter of which generally results in deficit spending and adding to the national debt.
And “fair share”? As defined by whom? Americans who earn the money? Or Democrats who want to spend as much of it as they can? Even worse? When is the Democrat definition of “fair share” ever enough?
Back to Biden’s “investment in our kids, our families, and our economic future.”
Ever notice how, when Democrats roll out trillion-dollar spending plans, they talk a whole lot more — in tried-and-trued Democrat talking points — about problems that don’t exist, and grandiose promises that never become reality? Me, too.
Yet? They talk a whole bit less about where the money is going to come from to pay for their latest monstrosity. Notice that even when they do, they intentionally underestimate the total costs, and lie about the scope of proposed tax increases to pay for the thing? Yeah, me, too.
What it all means.
Biden’s American Families Plan will hurt families. The AFP would increase Washington’s control of preschool, child care, community college, and four-year colleges.
The AFP is a wolf in sheep’s clothing, promising “free” assistance that will result in more debt for our children and grandchildren to pay.
The wolf promises to ease our burdens but, in reality, stands ready to take charge of the decisions that families and communities know how to handle best.
“More debt for our children and families.” Bingo. Including potentially catastrophic financial disasters for untold numbers of those children and families.
Part of Biden’s plan to fund the AFP is by amending federal estate tax law — the so-called “death tax” — that would eliminate stepped-up-basis on appreciated assets inherited by family members, meaning heirs would be forced to pay taxes on assets that increased in value during the lifetime of the deceased relative.
As reported by Just the News, current federal estate tax law — not to be confused with the various state inheritance tax laws — includes a stepped-up basis tax provision that allows an heir to report the value of an asset at the time of inheriting it, thus “stepping up” the cost basis to the current value of an asset at the time of the inheritance, at which point they could sell the asset immediately and essentially avoid paying capital gains taxes, or retain the asset and either sell it later at an appreciated value, at which point they would pay capital gains tax on the increase between the inherited value and the selling price — or retain the asset and pass it to heirs at death.
I apologize for the trip through the weeds, but here’s the bottom line:
The Biden administration wants to eliminate stepped-up basis on inheritances valued at more than $1 million. Democrats being Democrats, they have long seethed over the notion of wealthy heirs receiving their parents’ fortunes — period — but have particularly despised fortunes being inherited tax-free.
If we’re talking investment portfolios — fine; we can have that debate at a later time. But we’re also talking about family farms — many of them, generational family farms — as well as other family businesses.
“Loophole,” Joe? That is insane.
“There’s a loophole in the system called ‘stepped-up basis.’ If we close that loophole, that saves us $400 billion, which is enough to pay for the #ChildTaxCredit.” @POTUS #BuildBackBetter pic.twitter.com/CQxeyrDnsn
— Americans For Tax Fairness (@4TaxFairness) July 7, 2021
Iowans for Tax Relief vice president Chris Hagenow put it in real-life terms, via Just the News.
“When it comes to passing down a family farm to a niece or a nephew, the tax liability can result in selling the whole farm or significant pieces of the farm off simply to pay the tax bill. There is no question that an inheritance tax is a significant burden on families’ farms and their continuity.”
Ways and Means Minority Leader Rep. Kevin Brady, (R-TX) R-Texas, weighed in from his perspective, via Just the News.
“Democrats have pledged to repeal ‘stepped-up basis,’ which is what makes it possible for a family business – like a farm – to pass from one generation to the next without being forced to sell off assets to pay an enormous tax bill to Washington.”
One potential family disaster is the fact that most family businesses consist largely of illiquid assets. Large plots of land owned by farmers are a perfect example; the land can often push a modest farm valuation past Biden’s $1 million threshold.
— Lara Logan (@laralogan) August 10, 2021
The entire Senate Republican Caucus sent a letter to Biden in July warning him not to hit America’s farmers with this tax. Excerpts:
We appreciate your efforts to address America’s infrastructure challenges, but the cost of these investments should not be borne by family-owned businesses, farms, and ranches across the country. We are concerned that your American Families Plan proposes to make drastic changes to the taxation of capital income, including a longstanding tax provision that prevents family-owned businesses, farms, and ranches from being hit with a crippling tax bill when a family member passes away.
These changes are a significant tax increase that would hit family-owned businesses, farms, and ranches hard, particularly in rural communities. These businesses consist largely of illiquid assets that will in many cases need to be sold or leveraged in order to pay the new tax burden. Making these changes could force business operators to sell property, lay off employees, or close their doors just to cover these new tax obligations.
The complexity and administrative difficulty of tracking basis over multiple generations and of valuing assets that are not up for sale will lead to colossal implementation problems and could also lead to huge tax bills that do not accurately reflect any gains that might have accumulated over time.
As you will recall, a proposal to reach a similar outcome by requiring an heir to ‘carry-over’ the decedent’s tax basis was tried before in 1976—and failed so spectacularly it never came into effect. It was postponed in 1978 and repealed in 1980.
Finally, perhaps Rep. Jim Costa (R-CA), a third-generation family farmer, said it best, as transcribed by Just the News:
“Farmers responsibly pay taxes to contribute their fair share to our country. They should not have to face tax burdens to pass their land from one generation to the next. This is how we keep generations of families farming.
“Therefore, we need to maintain protections to ensure the long-term success of family farms. They are the backbone of economic activity in rural areas, and we know the production of food and fiber is a national security issue.”
Ah, but the fly in your logical ointment, Rep. Costa? As you well know, the voracious appetite of the Democrat Party to take as much of our money away from us as it can get away with is insatiable; regardless of the impact on those of us they take it from.
Moreover, Democrats are like spoiled children; the more they get, the more they want — even expect.
They can never get enough.