With this as background, consider now the second Washington Post article:

"Dubay’s estimates for exactly how much revenue it raises are flawed. His numbers compare the current “step basis” [sic] policy not to carryover basis, but to a policy in which all assets are taxed at capital gains rate when someone dies. That’s a much more dramatic change than carryover basis, and likely to raise much more revenue. So Dubay’s revenue estimates are considerably too high." [Emphasis added.]

This is factually incorrect. My estimate explicitly involves replacing the step-up in basis with carry-over basis. The Post does not make the important point that step-up is valid with the death tax in place and that carry-over is the proper system for the capital gains tax after the death tax is repealed. (The Romney plan repeals the death tax.)

The Washington Post says I overestimate how much repealing step-up basis could raise. According to the Office of Management and Budget (OMB), in 2013 alone, step-up reduces capital gains tax revenue by $24 billion.

That $24 billion is what OMB determined the IRS would collect if the step-up basis is repealed with the death tax still in place. This estimate accounts for the revenue that would be raised under the capital gains tax if the step-up basis is repealed and inheritors of assets pay the capital gains tax with a carry-over basis. The OMB estimate of the step-up remains the same whether the death tax is in place or not.

In my paper, I calculated that repealing step-up would raise $19 billion in one year, because some inherited assets would go to taxpayers with incomes less than $200,000. As such, I determined that the distribution of step-up would roughly follow that of long-term capital gains. (About 78 percent would therefore go to taxpayers with incomes over $200,000, according to the IRS.)

The capital gains rate under current law will be 20 percent in 2013, and Romney’s plan would keep the rate at 15 percent. That differential in rate could account for some overestimate on my part, except that the TPC report estimates how the Romney plan would apply in 2015. The growth over two years would likely make up for the difference.