Jun 28, 2010

Proposed estate tax a middle class blessing, billionaire's bust

The Responsible Estate Tax Act, introduced June 24 by Senator Bernie Sanders and several colleagues, takes an entirely new approach to the federal estate tax.
Under the proposal, estates under $3.5 million would escape federal estate tax entirely. Progressively higher estate tax rates would then kick in. Estates between $10 million and $50 million would be taxed at 50%; estates between $50 million and  $500 million would be taxed at 55%; and estates above $500 million would be taxed at a rate of 65%. Moreover, the tax would be made retroactive to Jan. 1, 2010, the date the federal estate tax lapsed entirely because of  congressional inaction. No doubt America's 400+ billionaires would not welcome passage of such a bill. And the retroactive feature would certainly be challenged by families like the Duncans, who inherited billions tax-free when oil tycoon Dan Duncan died earlier this year.
But for the middle class, passage would be a kind of blessing, allowing more families to escape the clutches of the IRS. Why? Because if Congress does not act by the end of the year, 2011 will see the estate tax exemption will revert to just $1 million, its pre-2001 level. I will keep you all posted on the status of this - and probably more to come - federal estate tax legislation.  Read more about the Sanders proposal for a progressive estate tax.

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