Well, benefiting to some degree from your parent's success is a time honored tradition. And, IMHO, is very reasonable as many parents hope to pass on to their children greater financial stability. That said, wrt to taxes, the allowed limits w/o taxes is getting very high - and this when people are having less children. So a reset in taxes on wealth transfers, capital gains as normal income and a truly progressive tax system would all help even out our silly system designed to benefit the top 10% of wage earners instead of the bottom 90%. And, at this point, not designed to fund the government to as reasonable a degree as possible. I really don't understand what is wrong with someone being taxed at 70¢ on the dollar for the portion of income that's over $1M.
But nobody is saying parents should be prohibited from passing on assets to their kids, just that the rest of society should not essentially fund it through tax breaks for doing so.
If you want to pass on all your stocks to your kids, great. Have at it! The only thing I'm arguing against is that when you do that their tax rate should be the same as you would have paid and not 0%.
If I want to pass on wealth to my children that is my decision not the government or you to decide and judge what I can do and not do with my wealth.
I agree! Nobody is stopping you from doing whatever you want with it. Where we seem to part ways is you are arguing that you and your family should get special tax privileges for you sitting on the assets until you die and I don’t.
The taxes on the sale of that asset should be the same no matter which one of you sells it.
I disagree. Let's let the government focus on how to tax the wealthy instead of trying to grab more money from middle class families to pay for more tax breaks for the wealthy.
The best part here is that closing the step up loophole WOULD be taxing the wealthy! They are by far the biggest beneficiaries of it, after all.
Again, if you would like to make a public policy argument for why this (simplified) scenario is good I’m open to hearing it:
1) Parents want to buy item X for their kid and it costs $100,000.
2) Parents do this while they are alive by selling $100,000 in long term capital gains, incurring a tax bill of $15,000.
3) Parents wait until they die and kid buys it with inheritance, incurring a tax bill of $0.
Why is number 3 superior to number 2?