Blogs Derek's Tax Blog New Estate Tax Bill
As a planner I urge my clients to create their estate plans for the law as written and to take a “I will believe it when I see it approach” to the politicians’ rhetoric. However, my job includes following the political debate and drafting flexibility into my clients’ plans, since I may not get an opportunity to fine tune their plans when every new tax bill is passed.
That is why I have been following the debate (mostly lake there of) in congress on the future of the estate tax. During the debate on the budget resolutions for President Obama’s first budget, we had some action in the Senate. When congress is back in session, the focus may be switching to the House, where Washington State Representative Jim McDermott is planning on introducing a new estate tax bill. Since it hasn’t been introduced yet, I can’t give you the details, but if the title, Sensible Estate Tax Act, is any indication it is likely to call for higher taxes than were included in the budget resolutions.
It is still unclear how much interest this will generate in the House, but higher estate taxes are also called for in a new report from the Institute for Policy Studies, "Reversing the Great Tax Shift". They call for a progressive estate tax on large fortunes, ($2 million exemption), that would bring in $40-$60 billion per year.
From a planning perspective, this would be an easy change in the tax law since it is the same size exemption as the current Washington State exemption and the Federal exemption last year.