All Hank, all the time.

[baltassoc]

Originally posted by sebastian_dangerfield
I'm confused. OK. I get how this is a gift to the rich. The rich get less taxes.

But how is everybody else getting screwed? Are you saying we have an entitlement to the rich's money?

Let's say your old man dies suddenly upon realizing that you have successfully spawned, leaving you the sole beneficiary of his estate of $500,000 of stock in tobacco and alcohol stock. Before, you would pay no taxes on the estate, and if you immediately cashed out the stock, you'd pay no capital gains tax either (if you held the stock, you'd pay cap gains on the difference between value when sold and value at the time of your father's death).

Under the new rules, you'd owe a 15% capital gains tax on the difference between what he paid and what it was worth when you sold it, even if you sold it immediately. Let's say the capital gain was the entire amount (because the stock was in a company he built from the ground up). You just got hit with a tax bill for $75k that you wouldn't have owed before.

Now, if Paris's old man dies, and leaves her $500 million, currently she gets hit with a tax bill of almost (if I remember correctly) $200 million, assuming her father took no action to shelter any of it using various means. Under the new plan, assuming all of it is again capital gain, she pays $75 million. A sizable tax break, in percentage (not to mention absolute) terms.

While an immediate sale is the simplest example, the effect is the same for both examples if the stock sale is later.