Late Breaking News on Estate Tax

President Barack Obama tonight announced “a framework for a bipartisan agreement” on temporarily extending the tax cuts that are scheduled to expire January 1.The estate tax would be reinstated for two years with a rate of 35 percent and a $5 million exemption. Most Democrats wanted a 45 percent rate and a $3.5 million exemption for the estate tax, which is imposed on inherited assets. Under current law, the estate tax went away this year but will come back next year at a top rate of 55 percent and only a $1 million exemption. This is a tentative deal between the President and the Republican leadership. Obviously, the Congress has to approve it. Members of Congress will review the deal at their party caucuses tomorrow. Many Democrats may not like the plan, since the president gave into Republicans on both tax cuts for the wealthy and the estate tax.