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There’s no escaping death and taxes — and under President Biden’s tax plan, the so-called “death tax” is poised to pack a wallop for New Yorkers.
The White House’s proposed tax law will for the first time treat inheritance tax as a capital gains event, meaning any heirs to an estate could pay the 39.6 percent capital gains rate on inheritance. That’s in addition to federal net investment income tax, New York state and city taxes, New York’s estate tax and the federal estate tax.
The eye-popping total? A 78.9 percent rate on the wealthiest New Yorkers inheriting assets — up sharply from the current rate of 49.6 percent.
A Biden spokesperson confirmed that the wealthiest people in blue states could be facing sky-high inheritance tax but noted, “The reform will be designed with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business.”
Nevertheless, the rule, while targeted at the wealthy, could impact anyone inheriting more than $1 million. And it may be those at the lower end of the bracket who pay the price. Indeed, some tax experts warn the measure may not achieve its intended effect, and whether New York will actually generate more revenue remains to be seen, they say.
“There aren’t a lot of people who pay estate tax as is … but they’re mobile,” said Jared Walczak, vice president of state projects at the Tax Foundation. “This creates a strong incentive for people to leave in retirement.”
Given New Yorkers could save as much as 14 percent by moving to a state like Florida — a chunk that could translate to thousands or millions of dollars for beneficiaries — many may find it hard to resist heading south for their sunset years.
“No New York taxpayer is going to pay 79 percent,” Frank Agostino, founder and president of Agostino & Associates in Hackensack, NJ, told The Post. “The real income redistribution will be from the rich to the tax lawyers and the lobbyists who help ‘rich taxpayers’ pay what the rich taxpayers consider to be their fair share.”
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