“Biden’s Capital-Gains Tax Plan Would Upend Estate Planning by the Wealthy” (Wall Street Journal, April 29):
President Biden’s American Families Plan would raise capital-gains taxes and end a rule that has been a cornerstone of estate planning for generations of wealthy Americans.
The change—increasing the top capital-gains rate to 43.4% from 23.8% and taxing assets as if sold when someone dies—would upend the tax strategies of the very richest households.
Let’s consider Jack and Jill Billionaire. Jill was the first Diversity, Equity, and Inclusion manager hired by a successful Silicon Valley startup. Her shares in the company, purchased for $1, are now worth $1 billion. Jack and Jill have two children, Morgan and Parker. Jack and Morgan currently identify as male. Jill and Parker currently identify as female.
If Jack and Jill were to die from triple-mutant coronavirus during President Harris’s reign, their children would inherit only around $430 million ($1 billion minus 43.4 percent federal tax minus 13.3 percent California state tax).
The U.S. offers no-fault divorce and same-sex marriage (by Supreme Court ruling). There shouldn’t be any obstacle to Jack and Jill cooperating on a divorce then Jack marrying Morgan and Jill marrying Parker. South Carolina law, for example (from Wikipedia):
(1) A man with his mother, grandmother, daughter, granddaughter, stepmother, sister, grandfather’s wife, son’s wife, grandson’s wife, wife’s mother, wife’s grandmother, wife’s daughter, wife’s granddaughter, brother’s daughter, sister’s daughter, father’s sister or mother’s sister; (2) A woman with her father, grandfather, son, grandson, stepfather, brother, grandmother’s husband, daughter’s husband, granddaughter’s husband, husband’s father, husband’s grandfather, husband’s son, husband’s grandson, brother’s son, sister’s son, father’s brother or mother’s brother.
Jack and Jill might each be able to marry either child if both children identify as some gender that takes them out of the “son” and “daughter” categories.
Now, when the Grim Mutant COVID-19 Reaper comes for Jack and Jill, the kids inherit $1 billion rather than $430 billion.
[What if Jack and Jill have four children rather than two? There is no limit to the number of no-fault divorce lawsuits that an American can file. Jack and Jill can marry and divorce their children in succession, with a tax-free agreed-upon property division after each divorce.]