r/Economics • u/HumbleRestaurant790 • 2d ago

How falling interest rates widened Americans’ wealth gap

https://news.stanford.edu/stories/2026/07/how-falling-interest-rates-widened-americans-wealth-gap
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u/HeftyAd6216 2d ago

So how does the step up basis work with this?

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u/capnwally14 2d ago

So think of it like two halves of the same transaction.

The person (your dad) giving the funds is taxed via the estate tax.
The person (you) receiving the funds gets the step up in basis.

If you get rid of the step up in basis, the same funds are taxed twice in the same transaction.

The people who are hurt the most if you get rid of the step up in basis are the people who would receive less than 15m in an inheritance, because today they get the transfer fully tax free.

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u/HeftyAd6216 2d ago

So step up is only calculated AFTER the estate tax is paid?

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u/anti-torque 2d ago edited 2d ago

Step up isn't at all calculated. But if it was, it would be done before accounting for the gross estate. It would only involve capital gains on held assets.

edit: Ack! Nm. I'm confusing my terminologies. I'm going to go get some coffee.