In addition to all the other balls the Obama administration is currently juggling, it looks as if it also plans to prevent the possibility of something truly macabre happening because of a law concerning 2010 that has been on the books for years.
As we all know, the estate tax is scheduled to disappear in 2010 before making a reappearance at 2001 levels in 2011. This bit of financial soufflé was the brainchild of the now departed Bush administration, which specialized in whipping up such concoctions.
Even at the time this provision was enacted into law, nobody believed it would really unfold in this way. The amount of ‘wink, wink’ going on in Washington at the time was so great that whole cadres of congressmen and members of the executive branch were thought to have developed a facial tic en masse.
However, despite the fact that no one really expected the estate tax to vanish in 2010, especially as the budget deficits started to bloom in earnest, there was still uncertainty in the estate planning market because the law was on the books. And we are a country of laws.
Every once in a while someone would raise the specter of seniors with estates large enough to owe estate taxes voluntarily choosing to go to the Kool-Aid counter just to spite the government during this very narrow window of opportunity. Imagine all that extra dough available to your loved ones simply because you cashed out before Jan. 1, 2011.
The Obama administration is not labeling its initiative ‘Save the Seniors,’ but that’s what it amounts to.
It’s likely that 2009’s estate provisions will be extended to cover 2010, meaning no free ride next year.
Further, a bill now on the table, S. 722, sponsored by Sen. Max Baucus, D-Mont., would reunify the estate and gift taxes, establish a $3.5 million per person exemption, index it for inflation, set a top tax rate of 45% and take the individual spousal exemption and make it automatically portable to the other spouse.
Sounds pretty generous to me. In fact, one could easily view S.722 as a new lease on life for those people rich enough to be affected by it.
So, wealthy seniors, live long and prosper. You’re going to pay in the end, anyway.
Tags: estate tax, legislation, seniors
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Your article was obviously written either after a cocktail party or before you had morning coffee of any quality.
The “financial soufflé” you speak of (estate tax reductions) wasn’t the “brainchild” of the Bush Administration. Presidents don’t generally write legislation. Rather, it was required due to the Byrd Rule under the Congressional Budget Act. Otherwise, this very carefully compromised bill (Grassley and Baucus were the chief architects) would have been subject to filibuster rules and would never have been passed – precisely what Senate Democrats wanted anyway. You will recall (maybe you won’t, considering the absent-minded inaccuracies in the piece) that Jeffords had jumped ship and given control of the Senate, narrowly, to the Democrats, making any tax cut legislation difficult. To characterize the 10-year sun setting of the estate tax rules passed during the Bush years, necessary under law to avoid a 3/5th majority to avoid a filibuster, as a “concoction” is a gross distortion of the facts and a manipulation of what truly happened. It’s too bad you don’t have an editor – if I was your editor, I would have sent this back to you with a large blue X through it. Maybe you should get one.
With regard your comments concerning “wink wink”: many Republicans are on record as stating that estate taxes in any form are unfair and represent double-taxation. The Cato Institute, The Heritage Foundation, and other organizations with interests in tax reform have published thoughtful, accurate pieces that show the inequality of taxing estates at death, something you clearly see as beneficial, probably because you cling to the age old Democrat talking point about revenue neutrality while they wring their hands and worry about where they are going to get more of our money .I was also repulsed by your comment, concerning the reintroduction of estate taxes, that it “sounds pretty generous to me”, which was flip and sarcastic. Perhaps this is because you, like me, aren’t in the bracket that requires a 45% donation of family wealth upon passing, and, unlike me, feel that those who have that amount of wealth don’t deserve it anyway. It’s their money – they earned it, and they should get to keep it. Being required to buy a life insurance policy, just to keep your hard earned money, isn’t only nonsensical, it’s immoral.
Piontek, I find your Bristol Palin reference in very poor taste. Quit trying to show people how clever you think you are and just write.
I never finished the article because I was so distracted by your lapse in judgement, you may have something of value to say, but who’d know.
Mr. Henson,
Although your response came in to the posting, Live Long and Prosper, you were no doubt responding to another posting, Virginity Lost. First of all, I did not put Bristol Palin in the public domain–her mother did. So if you think that my referring to her was in poor taste, what do you think about what Sarah did?
Second, let me give you a little advice. If you indeed do want to know whether someone has “something of value to say,” it generally pays to read past the first sentence.
Mr. Viehdorfer, I know perfectly well what happened back in 2001 regarding EGTRRA, so it really takes a lot of eye-shutting to say that the Bush administration had nothing to do with the 10-year voyage of the estate tax going down to zero in 2010 and then rebounding to 2001 rates in 2011. The administration was indeed a prime mover here.
As for my calling it a “concoction,” which you found a “gross distortion of the facts,” I have to admit you are right and I’d like to amend my comment and call it an “absurdity.”
Finally, you call having to buy life insurance for estate tax purposes “nonsensical” and “immoral,” but you also forgot to call it “cheap.” As hordes of the super-rich have found out, it is indeed a very cheap way of leveraging the tax code and getting to keep a lot more of their money.
In reply: Your distortion and spinning of facts leads me to recommend a thorough medical check-up – methinks you have left a sizable portion of your brains somewhere. This is written with all due respect and concern, because only someone who is only interested in passing off urban legend as fact [estate tax changes] would have responded to my detailed post in the manner in the way you did
The facts are what they are – in order to get a campaign promise to the voters passed Congress, the Bush Administration had no choice but to accept the Democrats ultimatum with regards the 10 year sun-setting. Otherwise, no bill. 10 minutes of fact checking on your part would have shown you the facts, which you obviously choose to ignore. The 10 year provision was purely and simply a Democrat invention designed as a stop-gap, defensive play – and it worked. To say otherwise is so much hot air and is inconsistent with the facts as they played out, at the time.
And, as far as your spin on the “cheap” aspect of estate planning and life insurance, you conveniently ignored my point entirely and chose to use a argument which skirted the entire issue, which any reader with a living brain stem can clearly see through. Having to buy anything to keep what is yours just because of death is immoral and stupid; whether or not it’s “cheap” is beside the point. Clearly, you feel that the Federal ‘gummint’ is a better manager of that wealth than the family or heirs it was just taken from. I, Sir, beg to differ.
In closing, I’d say you are following in the cardinal rule of present-day journalism: never let the truth get in the way when drubbing the opposition that you don’t agree with.