From a time-based perspective, the soon-to-be-reinstated estate tax is just around the corner. By any other standard of measurement, the details regarding the federal estate tax, its exemptions and demands are anything but clear. At this point, if Congress does nothing, the estate tax will come back on January 1, 2011, allowing for a mere $1 million exemption and charging a 55 percent tax on all assets above that threshold.
As columnist Sara Wyant writes in The High Plains Journal, “Even smaller farms and businesses could end up paying a bucketful of taxes (if) the owner dies next year.”
Wyant is right. Farmers, who may have millions invested in equipment and property, certainly have reason to fear, as do small business owners who may be facing similar situations. In fact, everyone has good reason to be looking toward 2011 with a bit of apprehension.
Congress’s indecision at the end of 2009 prevented the estate tax from renewing in 2010. Will indecision cause the opposite effect in 2011, forcing business owners and private citizens alike to carve out a larger part of their hard work for Uncle Sam?
So far, that seems very possible. While some lawmakers have put forth bills designed to raise the minimum amount of exempt assets and lower tax rates, there is plenty standing in the way of significant change. As Wyant points out, “The Statutory Pay-As-You-Go Act of 2010, enacted in February 2010, requires that any changes to the estate tax beyond a two-year extension of 2009 law must be fully offset by cuts in programs or revenue raisers.”
With program spending increasing under the Obama administration, such a concession seems unlikely. However, attempting to cut taxes without cutting funding to another area is hardly a solution either.
The best advice for those concerned about the 2011 estate tax is start planning now.
- Estate tax debate makes planning for death even more difficult (The High Plains Journal)