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  • 2021-02-03 (xsd:date)
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  • Did Biden Vow To Eliminate the 'Stepped-Up' Basis for Capital Gains Tax? (en)
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  • In early 2021, readers asked Snopes to examine the accuracy of a widely-shared social media post that purported to describe U.S. President Joe Biden's intention to eliminate a piece of tax law that allows taxpayers to benefit from selling on a home that is left to them by their parents. The post — which was critical of Biden and the supposed plan — first emerged during the 2020 presidential election campaign, but regained prominence after Biden was inaugurated in January 2021. It typically read as follows: The viral post accurately stated that Biden proposed getting rid of the stepped-up basis for capital gains tax, and correctly explained the potential practical consequences for an individual taxpayer who inherits a home. In fact, the tax hit for wealthier individuals would be even greater than the post stated, because Biden has also proposed doubling the rate of long-term capital gains tax for those with income over $1 million. We are issuing a rating of True. Here's how the nonpartisan Congressional Budget Office describes the stepped-up basis for capital gains tax, which is the tax due on profits from the sale of an asset, such as shares, a piece of property, and so on: In 2015, then-President Barack Obama also proposed eliminating the stepped-up basis. Here's his administration's explanation of how it works: During the 2020 presidential election, Biden and his campaign repeatedly expressed his intention to get rid of the stepped-up basis. As first highlighted by Politifact, the Biden campaign presented the proposal as a partial way to pay for its proposed student loan reforms. In October 2019, ABC News reported that: In June 2020, according to CNBC, Biden told would-be donors: I’m going to get rid of the bulk of Trump’s $2 trillion tax cut, and a lot of you may not like that but I’m going to close loopholes like capital gains and stepped-up basis. On the Biden-Harris campaign's website, a Spanish-language document outlining the campaign's plans for education reforms stated (translated): Elsewhere, the Biden campaign proposed not only getting rid of the stepped-up basis, but also doubling the tax rate for long-term capital gains — that is, profits from the sale of an asset that you owned for more than one year — for relatively wealthy taxpayers. Here's what the Biden-Harris campaign website stated, as part of the campaign's healthcare plan: The Facebook post shared widely in late 2020 and early 2021 accurately described Biden's stated intention to get rid of the stepped-up basis for capital gains tax, a move that would indeed increase the tax burden on a notional individual who inherits a piece of property from their parents, before selling it on. The tax hit for wealthier taxpayers would be even greater than the Facebook post outlined, since Biden has also proposed increasing the rate of long-term capital gains tax for those with an income above $1 million. The Facebook post did not mention that Biden had stipulated he would use the money raised from eliminating the stepped-up basis to help pay for his healthcare and education plans. We are issuing a rating of True. Snopes contacted the White House to ask whether the Biden administration still intended to push for the elimination of the stepped-up basis, but we did not receive a response in time for publication. (en)
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