President Joe Biden and his economic team are planning to forgo an expansion of the estate tax in the administration’s coming individual tax-hike proposals, according to people briefed on the plan.
Biden during the 2020 campaign pledged to increase the estate tax, along with raising rates on capital gains and corporate income, as part of an effort to force companies and the wealthy to pay a greater share of federal revenue. But the estate-tax boost won’t be part of the funding measures in the “American Families Plan” the president will unveil Wednesday, the people said, asking not to be named as the plan isn’t yet public.
Included in the plan is a near doubling in the capital-gains rate for the wealthy, Bloomberg has reported. The White House decided that that move was dramatic enough that the estate-tax hike could be excluded, according to people familiar with the discussions. Aides also did not want to include policy items unless they knew they had the backing of congressional Democrats, those people said.
The White House press office did not immediately respond to a request for comment.
The estate tax is a levy of up to 40% on the richest Americans when they die. For 2021, an individual can leave up to $11.7 million to heirs or $23.4 million for a married couple before the estate tax kicks in.
The exclusion of a hike in the estate tax is noteworthy to both progressive groups and liberal economists, because Biden had made taxing the rich such a central part of his campaign and presidency — and advocates view an estate-tax hike as one way to dismantle wealth passed along within families that’s often not subject to taxation.
Still, Biden’s coming tax package will feature an end to a major benefit for wealthy estates that drastically minimizes the levy for inheritors.