Estate tax sends elderly racing for the grave
Provided Congress fails to pass legislation to keep it dead and buried, the estate tax will rise from the grave on New Year’s Day, 2011. According to the Associated Press, this has prompted many elderly estate holders and their heirs to consider desperate measures. U.S. Rep. Cynthia Lummis (R-Wy.) recently stated that a number of her constituents are even planning to stop dialysis and other life-preserving treatments so they can die before the door closes on 2010.
Estate tax: It’s not all in the family
While Rep. Lummis declined to name anyone she knew who planned to take the estate tax shuttle to the terminal end, she did hint at what many people in business may be thinking. Many ranchers and farmers in Wyoming would rather pass along their businesses to family than see it go to the government.
“If you have spent your whole life building a ranch, and you wanted to pass your estate on to your children, and you were 88-years-old and on dialysis, and the only thing that was keeping you alive was that dialysis, you might make that same decision,” Lummis told the AP.
President Bush’s tax cuts: A wealthy reprieve
Bush era tax cuts effectively buried the 45 percent estate tax (aka the death tax). It was an ideal time to be an heir to a dying estate holder. Inheritance, certain wage income, interest, dividends and capital gains were all shielded from the government. Estates smaller than $3.5 million ($7 million for married couples) have been exempt from the estate tax since 1916, and 2010 was the golden year when even the largest estates were exempt.
If the estate tax returns in 2011, the exemption level will be lower – estates less than $1 million will be exempt– but the tax rate will be higher at 55 percent. Joseph Thorndike of the non-profit Tax Analysts told the Wall Street Journal that jumping from zero to 55 percent would be “the largest increase in a major tax that (the U.S. has) ever seen.”
Did Big George duck the tax?