As we wait for President-elect Obama to give us any new information about his tax plans, a consensus is building that the economic situation will force a delay in major tax changes; however, the estate tax is one that might be addressed as early as next year. The reason is the one year repeal of the tax in 2010. This article suggests that the change may be to extent the 2009 exemption and rate levels into 2010.
The idea of a one year extension creates some interesting scenarios. It allows Obama to check the estate tax off of his to-do list, at least in part. It addresses a tax mess that everyone agrees is unworkable, the one-year repeal of the estate tax in 2010. It the issue and allows it to be part of a major tax bill in 2010. It is revenue positive since extending the exemption and rate levels of 2009 to 2010 would actually be a tax increase for 2010. And, if congress chooses to leave it out of the 2010 tax bill, the estate tax exemption will fall to $1 million with the sun setting of the rest of Bush’s tax cuts.
The year 2010 will be an interesting year. Typically, a new president will loss support in congress at the mid-term elections. Since it is also the last year of Bush’s tax cuts, tax policy is likely to be a hot campaign issue. Additionally, by 2010 we are likely to start worrying about how we will be able to pay for all of the economic stimulus and bail out bills that have passed this year or are likely to be passed early next year.