The fiscal cliff. The fiscal cliff. Once more: the fiscal cliff. It’s on everyone’s lips lately, and political leaders in the U.S. are working to avoid it. As for a comprehensive solution, predictably Republicans and Democrats disagree. But there is one major aspect of President Obama’s proposal that has some members of his own party bristling: the idea of raising the estate tax.
New Jersey residents are subject to the heftiest inheritance and estate tax in the nation, so people in our part of the world are watching the fiscal-cliff talks very closely. In particular, raising the inheritance tax would place an extra burden on some farms and family businesses. In terms of the big picture, only a small percentage of all U.S. estates would be subject to higher taxes on inheritance, but nobody wants to sell any business assets or land to pay a tax.
The president’s proposal includes letting the estate tax go up 10 percent — from 35 percent to 45 percent. The plan would also lower the amount at which an estate could be taxed. But some Democrats aren’t falling in line with the president’s ideas.
“This particular tax is inherently unfair,” said Senator Mary Landrieu, who usually agrees with President Obama on matters such as raising individual tax rates for the very wealthy. But Montana’s Max Baucus and Arkansas’ Mark Pryor also joined their Democratic colleague Landrieu in saying they disapprove of the estate tax increase.
Still, if a deal to prevent the nation from going over the fiscal cliff isn’t settled, then the alternative is even worse for owners of large estates. The estate tax would go up to 55 percent for assets that exceed $1 million.
There is one thing in the coming year that is bound not to change: the fact that Bergen County residents will need creative solutions for reducing their estate-tax liability.
Source: The Wall Street Journal, “Plan to Raise Estate Tax Divides Democrats,” Siobhan Hughes, Nov. 30, 2012