Recently in Estate Tax Category

Only 0.3 percent of deaths in the U.S. in 2009 resulted in federal estate tax liability. This provides a rough approximation of the impact that President Obama’s estate tax proposal would have, because the estate tax rules in effect in 2009 are the same rules that President Obama has proposed to make permanent. A more sensible alternative is the estate tax proposal announced yesterday by Congressman Jim McDermott.

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New data from the IRS show that only 0.6 percent of deaths in the U.S. in 2008 resulted in estate tax liability. The estate tax that would exist under President Obama’s tax plan would affect even fewer estates, which demonstrates why Congress should consider enacting a more robust estate tax than what President Obama envisions.

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Congress About to Give Away the Farm

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Word on the street is that the Senate is considering including an unlimited farm exclusion from estate tax when it addresses the expiring Bush tax cuts during this work period. This report explains how this provision is not likely to help true family farms as much as extremely wealthy families who want to shelter their assets from the estate tax.

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CTJ's Legislative Agenda for 2010

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Steps Congress must take to avoid larger budget deficits and restore fairness to our tax system.

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To avoid larger budget deficits, the federal government must collect at least as much revenue as the President proposes. There are two bare minimum requirements for Congress to achieve this. First, Congress must not extend any more of the Bush tax cuts than President Obama proposes to extend. Second, Congress must raise at least as much revenue as President Obama has proposed ($760 billion over ten years) through loophole-closers and new revenue measures.

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The best estate tax policy, in terms of both fairness and fiscal responsibility, would prevent the estate tax from disappearing in 2010 and set the estate tax parameters as close as possible to pre-Bush law. The worst estate tax policy would be to shrink (or repeal) the estate tax to make it even less significant than it is under the rules in effect for 2009.

On December 3, the House of Representatives approved a bill (H.R. 4154) that would make permanent the estate tax rules in effect in 2009. On the spectrum of “good policy” to “bad policy,” this proposal falls somewhere in the middle. On one hand, it would be a tax cut of hundreds of billions of dollars for families who pass millions of dollars on through consecutive generations. On the other hand, it would prevent the estate tax from disappearing in 2010 and could make lawmakers less tempted to make permanent a repeal of the estate tax or to cut it more than it has been cut as of 2009.

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A new report from CTJ examines a duo of new "studies" claiming that repeal of the estate tax is crucial to our economy. The studies, which were commissioned by a foundation established to promote repeal of the estate tax, use one-sided analysis to produce the conclusions that their funders desire.

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On May 11, the Treasury Department released new details on President Obama’s proposed changes to the tax code. In addition to extending the Bush tax cuts for all but the richest Americans and making permanent many of the tax cuts in the recently enacted economic recovery act, the President would also make many changes that would raise revenue by closing loopholes, blocking tax avoidance schemes and making the tax code more progressive.

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The undersigned organizations support a budget that makes the investments we need to rebuild our economy and promote shared prosperity. We know that putting our country on the right path requires responsible choices, including ensuring that there is enough revenue to sustain our recovery and invest in the future.

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New estate tax statistics from the IRS show that the percentage of deaths resulting in federal estate tax liability is below one percent nationally and in most states and continues to fall. Under the tax cut enacted by President Bush in 2001, the federal estate tax is being reduced gradually over the decade (meaning the exemption for estates is gradually increasing while the tax rate is gradually decreasing) until it disappears entirely in 2010. Like almost all of the Bush tax cuts, the gradual changes in the estate tax expire at the end of 2010. If Congress simply does nothing, the federal estate tax will be repealed for 2010 but then return in 2011 in a form much closer to what existed at the end of the Clinton years.

President-elect Barack Obama has proposed a change that would prevent the estate tax from disappearing in 2010, but which would also unnecessarily cut the estate tax below the level it would reach in years after 2010 if Congress simply does nothing.

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