More estate tax proposals keep the issue at the fore. However there has been no indication the US Senate is about to agree on anything at all. One proposal is highlighted in recent news. While it styles itself as progressive, and because it taxes the extraordinarily wealthy at a higher rate then the less extraordinarily wealthy, it sort of it. However its striking how generous it is for a left wing, pro-estate tax proposal.
According to the Journal: "Under the proposal, as in 2009, the exemption would be $3.5 million for an individual, or as much as $7 million for a couple, with a tax rate of 45%. But estates with taxable assets between $10 million and $50 million would pay a 50% rate, and estates valued above $50 million would pay 55%. A further 10% surtax would apply to assets above $500 million."
According to the Journal: "Under the proposal, as in 2009, the exemption would be $3.5 million for an individual, or as much as $7 million for a couple, with a tax rate of 45%. But estates with taxable assets between $10 million and $50 million would pay a 50% rate, and estates valued above $50 million would pay 55%. A further 10% surtax would apply to assets above $500 million."
Other proposals would curtail certain kinds of estate planning techniques, particularly the use of "discounts" in valuations and eliminate the 2 year Grantor Retained Annuity Trust, which can be used as an offset in the budget since Congress is under the impression it will raise revenue.
While many are skeptical of the Senate's ability to do anything substantive on the estate tax, its still not too late. It would be helpful for Estate Planners (and clients) to know what the rules actually are as most of us seem to think that the assumption of a $1 million exemption and a 55% tax rate, which is current law starting in 20111, is wrong.