The Wall Street Journal reports that plans are afoot in Congress to pass a bill that would temporarily stop the repeal of the Estate Tax which is scheduled for 1/1/10 under current law. Of course, that current law sunsets itself on 1/1/11, but for one year there is no estate tax at all. (Those with a dark sense of humor are wondering if advisors for wealthy but sickly individuals are trying to find medical care to keep them alive until next January – or advising them to try to die in 2009?)
It had always been assumed that something would be done prior to 1/1/10 (or at least 1/1/11) to change the law passed in 2001. That law repealed the Federal Estate Tax with a 10 year phase-out. But, because the Republicans did not have a two-thirds majority, the bill itself could not be permanent. It had to include a “sunset” clause that repealed all of the bill’s provisions at the end of 10 years.
Many things intervened over the next several years, including the war on terror, hurrican Katrina, and now a new administration. So, the bill never was addressed – neither to make the repeal permanent, nor to stop the temporary repeal that will happen in 2010. So, now something has to be done in a hurry.
We would suggest that you contact your own representatives in Congress and express your opinion on this matter. The Estate Tax brings in revenue to the Government, but its original purpose was to stop the super-wealthy from amassing so much wealth and power that they threatened our Democracy. This was done with a high (almost 50%) tax rate. With inflation it is no longer appropriate to consider those with $1 or $2 million as a threat to democracy. The amount that is exempt needs to be increased and indexed to inflation, if we are to keep the tax.
Here is a link to the Wall Street Journal article: