The handover of assets from U.S. Baby Boomers to their children, expected to rank among the biggest wealth transfers in history, is well under way according to a new survey by research firm Spectrem.
The study, published as President Joe Biden prepares to scrap a longstanding capital-gains tax break used by wealthy estates, found that 66% of households with a net worth of more than $25 million in 2020 attributed their wealth to inheritance. That’s up from just 22% in 2007.
The number of such households also more than doubled since the financial crisis, to 214,000 -- more than the population of Salt Lake City -- and there was a similar increase in households worth more than $5 million.
Biden’s administration on Wednesday unveiled proposals for higher taxes on the rich that will help finance new spending on child-care, education and paid leave. His plan would eliminate a break that allows heirs to use the market value of assets at the time of inheritance, rather than the actual purchase price, as the basis for capital gains when the holdings are sold.
The president had also promised to increase the estate tax, a levy of up to40% on the wealthiest Americans when they die. That proposal wasn’t included in the plan which Biden is due to present to Congress later on Wednesday.
The administration has cited wealth gains posted by high-income Americans during the pandemic to justify its proposed tax increases. Last year, the richest 1% of households saw their net worth rise by some $4 trillion -- about 35% of the total wealth generated nationwide -- according to the latest quarterly study from the Federal Reserve.