Until death do us part, and part with stock gains | McClatchy Washington Bureau

Death and taxes have long been certainties, but they could become more intertwined

Under a new tax proposal from Hillary Clinton, the Democratic candidate would sharply raise the amount of taxes levied on some inherited stocks when they are sold.

Here’s how. Clinton would change the way some capital gains are taxed at death. Presently if someone bought a share of stock at $1.00, transferred it to an heir when it was valued at $90 and then the heir sold it when it was worth $100, the heir would pay taxes on the so-called step up, tax speak for the $10 difference.

Under the Clinton plan, the heir would pay taxes on the difference between the cost of the stock when it was first purchased and last sold, in this case the entire $99 difference. Experts for the watchdog group Committee for a Responsible Federal Budget estimate that this change could raise $150 billion in new revenues over a 10-year period.

“Although the Clinton campaign has not outlined specific parameters, it has expressed support for a variety of exemptions to prevent the tax from applying to taxpayers making less than $250,000, and to limit its impact on various non-financial assets such as farms, businesses, and real estate,” the group said.

This is philosophically similar to a plan proposed in President Barack Obama’s dead-on-arrival 2016 budget that would have forced heirs who inherit retirement accounts to take the money out in taxable chunks over a five-year period.

In what’s viewed as a bid to win over more supporters of vanquished rival Sen. Bernie Sanders, I-Vermont, Clinton would also impose an estate tax as high as 65 percent on large estates as part of a move to get the wealthiest Americans to pay more. She had originally proposed raising it from its current 40 percent rate to 45 percent for estates larger than $5 million.

Now Clinton favors a three-stepped approach for larger estates: a 50 percent for estates valued over $10 million, 55 percent for those above $50 million and 65 percent for those larger than $500 million. The Committee for a Responsible Federal Budget estimates this would raise $75 billion in new revenue over its first decade after implementation.

GOP candidate Donald Trump has proposed eliminating the estate tax entirely, and experts have said he has yet to offer measurable offsets for lost revenue..