December 3, 2008 01:59 PM | Permalink |
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 If Congress simply does nothing, the federal estate tax will be repealed for 2010 but then return in 2011 in a form much closer to what existed at the end of the Clinton years.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.