In point of fact, if the repeal enacted by the House becomes law, it will do a lot more than that. If used correctly, the law would let huge amounts of wealth be created and never be taxed at all. The trick is in a little-noticed part of the repeal that deals with the way the government taxes inherited assets. Now, when a person dies, all the assets in his estate are valued. Sometimes, the estate must sell assets to raise the money, although often the proceeds from insurance policies are used to do so.
Heirs pay no taxes on what is left.
However, if they inherit assets such as stocks or bonds, they must pay a capital gains tax when those assets are sold. The value it gained during the lifetime of the person who left it was taxed when the estate was settled. Without an estate tax, however, that value is not taxed at death. Instead, the repeal would tax the value when the heir sold the asset. Thus, under the repeal, the heir would have to pay a capital gains tax based on the original value of the asset when it was acquired by the person who left it, rather than on its value at the time of death.