Death Tax Ambush: 48% Capital Gains Tax Surprise

As many were departing for a long Memorial weekend, the Biden Administration released the long-awaited Green Book. Many of us in the life insurance side of the financial services industry have been talking and writing about Biden’s campaign promise to tax the wealthy by rolling back Trump’s tax cuts -specifically by reducing the estate and gift exemption and increasing the tax rates. At the same time, some acknowledged that Biden also promised to raise capital gains tax by eliminating the benefit of step-up basis at death, but many commentators acknowledged the difficulty of implementing such a change. Many believed rolling back the estate and gift tax exemptions and rates were more likely than the elimination of step-up in basis. Much to our surprise, the Green Book does not propose any estate and gift tax increase but proposes significant changes to capital gains taxation. Following is a summary of the capital gains proposal: Read Full PDF