In addition to raising the capital gains tax, President Biden’s ambitious $1.8 trillion American Families Plan could significantly increase estate taxes when wealth is transferred to family members, heirs and beneficiaries.
Biden’s plan, which has received considerable pushback from Republicans and moderate Democrats, features a wide range of initiatives to support families through $800 billion in tax cuts and $1 trillion in expenditures. In its current form, the AFP will provide financial support for child care, family leave, health care, higher education and a number of other programs.
To help pay for the plan, the Biden administration wants to raise the capital gains tax rate to 39% from 20%. It also plans to eliminate a tax adjustment called a “step up in basis” that minimizes capital gains taxes in excess of $1 million per person (double the amount for couples) for assets passed down to heirs.
The good news for Oklahomans, if any, is that the step up in basis will not be levied on family-owned businesses and farms when wealth is transferred to heirs who will continue to own and run the business. That’s an important point because those small business owners, mineral rights holders, ranchers and farmers are the heart and soul of the Oklahoma economy.
Small businesses represent 99.4% of all commercial enterprises in Oklahoma and employ 52.2% of all workers, according to the U.S. Small Business Administration. The Sooner State has 78,000 farms and ranches covering 34.2 million acres that export $1.9 billion in agricultural products. And there are 24,398 mineral owners in Oklahoma who own assets worth $12.5 billion.
Read the full story here, originally published on Journalrecord.com May 25, 2021