Estate Tax Reform

[fritz]

Isn't it comforting to know that if you croak in the year 2010, your estate will not be taxed by the estate tax?

 

That is a real relief, or is it? To claim this tax relief, you must croak during that year, because it is only that one year that is exempt.

 

Anyway, here is the story--

 

"Final repeal of the estate tax is high on the agenda of the White House and congressional Republicans. It has already passed the House, but vote counters are not sure if they have 60 votes in the Senate to avoid a filibuster. This has emboldened estate tax supporters, who want to keep it alive in any way possible. There is a lot of pressure to resolve the issue one way or another this year. Under current law, the estate tax is repealed for one year, 2010, but then comes back again in 2011. This nonsensical law is the result of Senate budget rules that prohibited enactment of permanent repeal in 2001. But the result is to make it almost impossible to do estate planning, since no one has any idea of what tax regime will really exist after 2010. Even many of those who support repeal are willing to keep it with lower rates and a higher exemption if they can get some permanence in return. Estate tax supporters are desperate to keep the estate tax in some form or another because they know it will be harder to reinstate after it has been out of existence for some time. As long as the tax exists, rates can more easily be raised back up to confiscatory levels the next time Democrats are in power. ... The estate tax has never been a significant revenue raiser for the government. Its elimination won't affect the budget meaningfully. Its main purpose is to satisfy the envy of those who want no one to be rich if they can't be. That's a poor justification for tax policy and a sufficient reason to get rid of the 'death tax'." --Bruce Bartlett

 

fritz