Dianna Graves: Biden's tax plan on inherited wealth unfair (Opinion)

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President Joe Biden rode into the White House on a promise to provide economic relief for those Americans who were hardest hit by the COVID-19 pandemic.

To get people back on their feet, he pledged to increase federal government spending on everything from secondary education to senior services. These ambitious goals, he said, would be fully funded by having wealthy Americans “pay their fair share.”

To accomplish these goals, President Biden introduced the American Families Plan. To pay for the plan’s $1.8 trillion price tag, the president laid out several strategies that he assured would generate enough revenue to cover the spending without raising taxes on middle-class Americans.

In the funding plan, he includes a proposal called the Sensible Taxation and Equity Promotion (STEP) Act. This provision would eliminate an element of the tax code called “step-up basis” and institute a retroactive tax on the appreciation of inherited assets valued over $1 million.

The STEP Act would force a fictional sale of assets to make the heir to a family house, farm, business, or any other inherited asset worth more than $1 million, pay taxes retroactively on any capital gains that occurred under the previous owner.

Let’s put this into perspective.

Take someone who came from nothing but was determined to leave his kids better off than the start he had. He worked all his life, taking a hard job to make decent money that he saved and invested wisely so he could pass something on to his children. He saved enough money that his investment grew by $2 million after 40 years of work and sacrifice. The day he dies, the government will swoop in and claim $800,000 in taxes. So, instead of leaving his five kids the sum of his lifetime savings, the kids get whatever is left after the confiscatory new tax is levied. And keep in mind, this man already paid taxes on his money. Taxes were taken out of every paycheck he got, and he invested on what was left. But the government needs to find a way to pay for Biden’s massive spending, and extra taxation of this man’s entire life savings is the key.

Or take a small business, like a family farm. It’s owned and operated by a woman who believes in giving back to her community. She started with nothing but built a successful business with a lot of hard work and sacrifice, and now it employs 30 people, all of them locals. She reinvests back into the company and her community everything that she doesn’t need to eat or pay her bills. But then she gets cancer and dies. With the STEP Act, the government comes in, evaluates her business — on paper — at $10 million because of all the investments she’s made in the property and equipment over her entire lifetime of work. She never received money like that a day of her life. All she had was the business she had built,which she hoped to turn over to her children at her death.

Unless specifically exempted, Biden’s “Fairness tax” will create a $4 million tax, in addition to the estate tax, that could be levied against her estate to the tune of several million dollars. So, her kids will need to raise roughly $7 million to pay the government to keep the family farm. The business does not generate that kind of cash, so they will have to sell her farm to a competitor or private equity firm that likely is not part of the community and which, if history is any guide, will choose to sell it off in pieces, and the local employees will be on their own.

These are hypothetical examples, but, regardless, the local community would be better served if the money in that woman’s estate remains local, instead of going to the IRS. And that man didn’t work his entire life to help politicians in D.C. achieve their objectives — he intended his life of work to go to his children.

I urge Sens. Joe Manchin and Shelley Moore Capito to stand up for West Virginians and oppose implementation of the STEP Act. The pandemic brought West Virginia’s economy to its knees. The last thing the Mountain State needs is another tax hike on West Virginians handed down from politicians in Washington.

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