The estate tax isn't going anywhere
But the unlimited exclusion is likely to end this year, and the tax will stay alive.
Will somebody please smack the back of the head of the supposed savant, still searching for the second digit in his IQ, who keeps asking the same silly question:
“Will the estate tax disappear?”
No, it won’t.
Here’s the issue.
Back in 2001, Congress actually did the right thing. It reduced our taxes, big time. But then again, as my wife, Barbara, keeps reminding me, “Even a stopped clock is right twice a day.”
But, to comply with the Congressional Budget Act of 1974, all tax reduction provisions expire Jan. 1, 2011.
Get ready for this.
- Bing: Death and taxes
With respect to the estate tax, the amount not subject to tax (in addition to any amounts given to a surviving spouse) went from $600,000 to $3.5 million for 2009.
But, as Jan. 1, 2011, the exclusion falls to only $1 million. Make sure you pull the plug by New Year’s Eve. Again, it’s just good tax planning.
However, there’s no way our current Democratic Congress is going to allow an unlimited estate tax exclusion. That’s the death of the estate tax. It’s not going to happen under this administration. And, there’s no way the Republicans are gonna put up with the exclusion shrinking to only $1 million.
Before the end of 2010, the current $3.5 million exclusion will be extended at least through 2011.
There will be screams of unconstitutional ex post facto laws. But the Supreme Court has already ruled that mid-year changes in tax rates are allowed. Congress would just change the rates for 2010 from 0 to as much as 45%.
We now have different people on the court. But I’m not optimistic, even though I hope I’m wrong on this one.
Sorry, big money grandpa. The machine idea was a good one but it just ain’t gonna work.
The upside is that we won’t have to pull the plug at the end of 2010 to avoid the scheduled $2.5 million drop in the estate tax exclusion.
Rest in peace anyway.
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