Friday, June 09, 2006

Blocking Estate Tax Relief

The federal estate tax is scheduled to be phased out in its entirety in 2010. However, if you die in 2011 or thereafter, you'd be facing the federal estate tax (and all the state estate taxes that are keyed to the federal tax) in its full fury.

That doesn't help anyone - least of all those who are estate planners or those who hope to die and pass on their hard earned savings and investments to their loved ones without the tax man taking their cut.
The U.S. Senate on Thursday killed a bill backed by President George W. Bush that would have permanently repealed estate taxes.

On a vote of 57-41, the Senate blocked consideration of a bill passed by the U.S. House of Representatives that would wipe out what Republicans call the "death tax."

Republican backers had acknowledged they were short of votes for full repeal, but they had hoped to offer an alternative that would have reduced the tax rate and exempted all but the wealthiest estates from the tax.
I would imagine that the revised estate tax would impose tax on those with estates over $10 million, and progressively increase the rate to 35% on estates valued over $100 million (essentially mirroring the income tax). It might not bring in as much revenue as the existing tax, but families and estates will be able to retain more money that can be used for their own personal enjoyment and spending.

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