Senate Republican Whip John Thune (R-S.D.) has introduced S. Amdt #3106 to S.Con Res. 14, the Fiscal Year 2022 Budget Resolution. ATR urges Senators to support and vote YES on this amendment.
This amendment would preserve step-up in basis, preventing Democrats from creating a Second Death Tax.
Repealing step-up in basis would impose the capital gains tax on the unrealized gains of every asset owned by a taxpayer when they die and will be imposed in addition to the existing 40 percent Death Tax.
Repeal of step-up in basis would create new complexity for many taxpayers including family-owned businesses. It will force predominantly family-owned businesses to downsize and liquidate assets, leading to fewer jobs, lower wages, and reduced GDP.
As noted by the Ernst and Young study, a repeal of step-up basis would increase the cost of capital and discourage new investment. This negative economic impact will cost 80,000 jobs each year for the first ten years, increasing to 100,000 jobs each year thereafter. One third of the tax will also fall on American workers in the form of lower wages.
Repealing step-up in basis has already been tried and failed. In 1976 Congress eliminated stepped-up basis, but it was so complicated and unworkable it was repealed in 1980 before it took effect.
If lawmakers are serious about protecting family-owned businesses and farms, they should vote YES on Senator Thune’s amendment.