Blogs Derek's Tax Blog The President's 2011 Budget and Groundhog's Day
When I reviewed the President Obama's Budget, I felt like I was in the Bill Murray movie. Please Punxsutawney Phil, give us guidance!
When it comes to the estate tax, this year’s budget is a lot like last year’s budget. They both assume that the 2009 estate tax exemption of $3.5 million and tax rates continued into the future. Just like last year we are waiting for congressional action. And like last year, we will see another change in the law next year if congress and the President are unable to pass an estate tax bill this year.
However, that is where the similarities end. Since the 2010 budget was released the political landscape has changed.
- Even with a Democratic majority, the Senate has become bogged down;
- Massachusetts has decided to send Republican Scott Brown to the U.S. Senate;
- The realization that more needs to be done to foster the recovery has pushed job creation to the top of the priority list;
- Concern over the budget deficit is growing;
- The Senate recently agreed to Pay-Go budget rules and the President is planning on forming a deficit commission; and finally,
- This year all of the House seats and one-third of the Senator seats will be up for election.
In addition, with regard to the estate tax we are starting to see the first questioning of the cost in terms of lost revenue of extending the 2009 law. One example is the 2 year exception to the Pay-Go rules for the estate tax in the Senate bill. Another comes from OMB Watch:
“President Obama at once touts $250 billion in spending cuts through a freeze in domestic spending that affects all Americans, but he loses that same amount through his estate tax proposal, which affects the wealthiest, multi-million dollar estates in this country.”
During this election year we are likely to see more comparisons like this putting any concessions that may be won for the estate tax exemption and tax rates on shaky footing.