No Movement on the Estate Tax

The articles states that “the best strategic outcome now is to let the death tax expire in January as scheduled under current law, and return to this debate next year when the tax rate is zero. Then let liberal Democrats explain to voters on the eve of elections that they must restore one of the most despised of all taxes.”

This is not exactly accurate in that while “restoration” of the estate tax for 2010 would require congressional action, without any action the exemption will be reduced to $1 million and the rate will increase to 55% in 2011.  So if next year the Democrats propose imposing the current $3.5 million exemption and 45% rate on 2010 and future years, they will actually be proposing significant tax relief.  That would get my vote.

Here are yesterday’s and today’s articles from the Wall Street Journal.  While there is a brief discussion of the 2010 “Carryover” Basis rule that will apply instead of the estate tax, there is no mention of the fact that each estate will have $1.3 million in basis to apply to assets, with an extra $3 million for spouses.  Even with these generous exemptions, it will be a record-keeping nightmare.