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Completely overlooked in this opinion piece is the fact that in lieu of income taxes, these "vast fortunes" are instead subject to the estate tax. That tax is a flat tax of 40% of the value of the estate over about $11.7 million. (You can double that for a married couple.) So in exchange for paying the estate tax, the heirs get to skip the income tax. That tax - assuming the basis of the "vast fortune" is approximately zero - is only a maximum of 23.8% of the value. (20% long term capital gain tax rate plus 3.8% for Medicare tax on investment earnings over a low 6 figure threshold.)

For smaller estates up to about $24 million (as if $24 million as actually small), the estate tax is preferable to the income tax. But for larger estates, it is far cheaper to pay the current income taxes on their wealth than the estate tax.

But there's more. Biden's proposal also raises the top capital gain tax rate to 39.6% - matching the top rate on ordinary income. So that would make the income tax roughly match the estate tax.

So what are some potential fallouts from this change in the income tax code?

First, people will start squealing like stuck pigs over double taxation. "I have to pay both income tax AND estate tax on the same money!! That's not fair! That's double taxation!!!" Yes, it is. So what? You made way more than you needed during your lifetime, and you're heirs are still getting some significant coin. But these are influential voices - and they can afford lobbyists. So they will attempt to get the estate tax repealed, or at least get some kind of credit for the income tax that now has to be paid.

Then there's the problem of keeping track of this carryover basis. It's easy to do that for the big names - Walton, Gates, Buffet. They are the founders of their now publicly owned businesses and their investment in their business is minuscule compared to the value. But what about people like the readers here? Their wealth is more likely to be created from a lifetime of saving and investing. And your basis in your investment portfolio is not so easy to calculate. Yes, brokers are required to keep track of your basis. But that only started a little over a decade ago. Brokers weren't required to track your basis before around 2010. How do heirs get basis information from before then? If you don't take the time to spell out your basis in every single stock and mutual fund and bond you own, then update that information regularly, and then pass that information on, your heirs may end up paying more taxes than they need to. Under the tax law, if you can't substantiate your basis, it is deemed to be zero. One part of the reasoning behind carryover basis is to deal with this problem. Pay the estate tax instead of the income tax, then step up the basis to a value the heir can calculate without assistance from the deceased - who can't assist any more.

Finally, let's not forget the impact on the less wealthy. I don't see any exception to the loss of step up basis for those with less than $11 million in assets. So while you wouldn't be paying estate taxes anyway, you got to benefit from the basis step up. But with no step up, this is an increase in your taxes - more correctly, your heir's taxes - as well as those who are fabulously wealthy. Heck, it even impacts people who pass on nothing more than the family home. Mom and Dad never were wealthy, but they were able to pay off their home and retire on their small pension and social security. Now that home will get taxed when you inherit it.

This isn't just a tax on the wealthy. This is a tax on everyone.

I'm not saying that generational wealth isn't a problem. But I don't think this is a good solution to it. And the argument in favor of it almost universally overlooks the significant tax that is already being paid by only the wealthy.

If you want to work on reducing the wealth disparity in this country, a larger estate tax is a much better way to get there.

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