Could come into play in upcoming budget, tax and spending battles:
How should we tax the Great Wealth Transfer? – Brookings
“Over the next several decades, the U.S. will experience the largest flows of intergenerational transfers of wealth—in absolute and relative terms—in modern history. Taxing these flows appropriately and judiciously represents an opportunity to raise revenue, improve the vertical and horizontal equity of the tax system, bring about more equal opportunity, and reduce the role of family dynasties in the economy. The current transfer tax system, however, has been eviscerated in recent years and is ill-equipped to help society reach these goals. Despite repeated claims to the contrary, rebuilding a functional transfer tax system would not necessarily reduce capital accumulation or efficiency, and it certainly could be structured in a way that takes account of the special considerations raised by small businesses or family farms. These issues are of current interest as Congress looks for ways to close the fiscal gap. Our estimates show that thoughtful reforms to the wealth transfer tax system—including taxing unrealized capital gains at death and converting the estate tax to an inheritance tax—can raise revenue, increase progressivity, and improve the economy in other ways as well. These reforms would help impose an important backstop to collect taxes on accumulated income that is currently escaping tax free. Policymakers should take these estimates into account as they evaluate wealth transfer tax options as well as fiscal consolidation more generally.”
Related CCSE work: