With mid-term elections just around the corner, an issue that has lain dormant all year has been revived. The federal estate tax, (or lack thereof,) has become a rallying cry for politicians in Washington and around the country.
The Wall Street Journal reports that the topic been contentious in Senate races in Florida and Kentucky, as well as in House races in Missouri, Georgia, and other southern districts. President Obama favors a return to 2009 levels when the exemption amount was $3.5 million and the top rate was 45%.
A competing bill, introduced by Senate Republicans, would retroactively raise the estate tax applicable exclusion amount and GST exemption to $5 million, repeal the carryover basis rules, reunify the estate and gift tax exemptions, reduce the top estate and gift tax rate, (and the sole GST tax rate,) to 35%, permit a surviving spouse to take advantage of the unused applicable exclusion amount of the first spouse to die, and allow the executors of estates of decedents who die in 2010 to elect whether to be taxed under this new regime or under the present 2010 rules.
In the meantime, over 250 current congressional candidates have signed a pledge calling for the elimination of the estate tax altogether. Total elimination may be a hard sell in a time when there are big budget deficits, however, eliminating the estate tax would cost about $410 billion over the coming decade, assuming the 2001-level tax returns as scheduled next year, according to the nonpartisan Tax Policy Center.The 2001-level tax was an exemption of only $1 million and a top rate of 55%.
We can only hope that by the end of 2010, lawmakers will finally resolve the estate tax, but any resolution is unlikely to come before the mid-term elections.
Julie R. Lackner, Esq.