Does Treasury Secretary Yellen Really Want Unrealized Capital Gains to be Treated as Income?
Posted on 09/29/2021
On September 28, 2021, Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Janet Yellen testified on the coronavirus and CARES Act before the U.S. Senate Banking, Housing and Urban Affairs Committee.
Here is the transcript: Yellen replies, “Senator Shelby, 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 onto these assets during their lifetime, that income is never taxed. And we know that for some of the wealthiest individuals in the country, they pay very low taxes overall because most of their income takes the form of unrealized capital gains. The Biden administration proposed that at death those gains be taxed. And with careful consideration, not in any way to harm the prospects of family owned farms or small businesses, there were substantial exemptions to protect them. Even if there is not actually taxation imposed at death, getting rid of stepped up basis would mean that in air would inherit the original basis of the asset. And when that person eventually sold the asset, taxes would be paid. But I regard step up of basis as a kind of loophole that allows a very large portion of income in this country of the wealthiest individuals to go untaxed.”
Earlier in 2021, Yellen proposed taxing unrealized capital gains to boost U.S. government coffers during a virtual conference hosted by The New York Times. Capital gains tax is a tax on the profit that investors realize on the sale of their assets.
Keywords: Federal Reserve System.