Kennedy spoke to Fox News host Tucker Carlson on Friday about Biden and Yellen’s support for changes to an inheritance tax policy called the stepped-up basis, which limits the payable tax on an inherited asset that has appreciated over time.
The Louisiana senator opposes changing the stepped-up basis and heavily criticized the Biden administration, warning that its proposed changes would “maul the real estate market.”
Forbes Advisor explains that “any asset left to an heir has its basis, or the price upon which all increases in value are calculated for tax purposes, stepped up to its present value at the time someone inherits it. This can help heirs avoid large amounts of taxes on assets that have seen large value increases.”
On Tuesday, Yellen told a Senate hearing: “I do support eliminating stepped-up basis.”
“The reason is that a very large share of the income of wealthy individuals is simply never taxed. Individuals hold on to these assets during their lifetime. That income is never taxed,” she said.
The administration’s plan includes exemptions for individuals of $1 million and $2 million for married couples. Carlson played a clip of Yellen from the Senate hearing and asked Kennedy about the issue.
Kennedy said: “Let’s suppose you’ve got a young widow with three children, she never remarries.”
“She goes and buys a $150,000 home to raise her kids and she raises her kids in the home. She’s not rich, she works. But her main asset, her only asset, is her home. Fifty years later, she dies,” he went on.
“As a result of inflation and appreciation over 50 years, her $150,000 home is now worth $1.75 million. She leaves her home to her kids,” Kennedy said. “Under current law, her kids would not have to pay any income tax on that home if they didn’t sell the property. They wouldn’t have to pay any inheritance tax either but that’s a separate issue.
“But under the Biden-Yellen rule, those kids would automatically be taxed on the full value of the home whether they sold it or not. Now it’s a little more complex than that, but the point is, those kids are not gonna have the money to pay the taxes. So they’re gonna be forced to do a fire sale on the home their mom worked for just to pay the taxes,” the senator said.
Kennedy said the change would “maul” the real estate market and then criticized the administration more broadly.
“And I guess the moral of the story is this is what happens, this is what happens when you have a president and a Treasury secretary who are on a mission from God to please pink-haired wokers who carry around Ziploc bags of kale,” the senator said.
“This is what happens when you have a president and a secretary who want to tax, spend, and regulate America into neo-socialism,” he added.
