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Daryll44 asks,

So at the margin, on assets with a zero basis, a 49% capital gains tax and about a 50% estate tax. If I do the math about right, the heirs end up with about 25 cents on a dollar. I agree this won't hit the little guy, but it does hit family businesses. And is it really American to take 75cents of someone's dollar at death?


The "stepped-up basis" at death has been a part of the tax code for nearly 100 years. In an earlier post, I demonstrated that merely avoiding paying a financial advisor a 1% fee over 60 years increased the value of the account by 76%.

What would be the effect of avoiding say a 10% tax over 100 years? I haven't done the calculation, but I wouldn't be surprised if 95% of the value of these billion-dollar multi-generational family fortunes is due to the "stepped-up" basis and tax avoidance. They're getting off easy if they're only going to pay a 75% tax.

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