Wednesday September 1, 2010 10:05 am
One area of the debate over the Bush tax cuts that seems pretty cut and dried is the estate tax. Right now there is no estate tax for 2010. If we do nothing, it will revert back to the Clinton-era rates of 55% for estates over $1 million dollars (that’s a marginal tax, by the way, so the tax on an estate worth $1,000,001 would be 55 cents). Various proposals would lower the marginal tax rate and increase the exemption; the most common proposal is to permanently set the estate tax at 2009 rates, with a 45% tax on estates over $3.5 million dollars, $7 million for a couple’s estate.
What’s important to understand is that this reversion to 2009 rates permanently would cost the country $292 billion dollars, according to the Tax Policy Center. If we made it retroactive to capture the tax on estates in this holiday year of 2010, maybe it’s closer to $250 billion. But it’s still a large hole in the budget relative to current law, in a time when every deficit hawk is screaming about long-term debt.
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