Estate planning viewed through the lens of asset protection.®

Drawbacks of Proposition 19

On Behalf of | Feb 8, 2021 | Uncategorized |

California residents may have heard about Proposition 19, which is a polarizing piece of legislation. This bill would allow for new taxes to be imposed on families who have inherited properties on which they do not plan to live, so it has sparked much controversy in recent years. While some people believe that it will be a step forward for the economy in the United States, others argue that imposing new taxes on those who inherit property would be a harsh stipulation, serving instead as a means of penalizing families who do not own any other assets.

Potential benefits

One can reasonably predict that Proposition 19 will have some short-term benefits for the economy. After all, new taxes create more money in the treasury, which, in turn, means a higher budget for various government programs. This will ultimately benefit struggling families. However, there is also a very real possibility that the bill will cause more harm to the average American than it will provide benefits.

Potential drawbacks

One of the greatest drawbacks of Proposition 19 is the adverse effect it could have on small businesses in the United States. Many of these businesses are family-owned and do not generate much profit beyond a subsistence for the owners and their families. To impose new taxes on inherited property would make it difficult for such businesses to survive after the current owners pass away because their families would have to find a way to pay the new property tax while still providing upkeep for their business.

While it is true that Proposition 19 will benefit Americans to an extent by increasing tax revenue, it may end up hurting some families more over time. Individuals who are worried about the effects of this legislation may want to turn to an estate law attorney with their questions.