So if you get a $150M loan off of your amazon shares that on paper are worth $150M, but you paid $100M, you have a cap-gain of $40M, and at 20% tax, $8M fills the IRS's coffers.
Obviously the tax basis in the assets would also be stepped up by this action.
The US should also get rid of the step up in basis at death. The recipient of an illiquid asset such as a family business should have a period of time (perhaps five or ten years from the triggering death depending on the type of asset) to "pay up" the tax basis "to market" at the time of death. Gains in liquid assets (such as publicly traded stock) should be taxed at the market value at the time of death by the estate or trust and passed on to beneficiaries with that adjusted tax basis.
This would actually fix the issue without my suggestion, but it is a harder pill to swallow for the "soon to be rich" Americans that tend to vote against their current economic interests.
Is this a real problem? And how do we fix that?
If you inherit a farm worth 1m and you have to pay estate taxes on that of 100k. You do not have to sell the farm, you can instead take out a mortgage to cover that 100k.
When we frame it that we its still very fair to the person inheriting the farm because who wouldnt want a $1m farm for 100k.