Over at the TaxProf blog, there is a great post on the effect of the estate tax "repeal" vs. the effect of the proposed Kyl Estate Tax Amendment. The post (quoting an abstract from Aviva Aron-Dine) begins:
"Permanent repeal of the estate tax would reduce revenues by almost $1 trillion between 2012 and 2021, the first ten-year period in which its costs would be fully felt. With the economy slowing and deficits returning — and with far larger deficits projected for future years — there is increasing recognition that estate tax repeal is unaffordable."
So, what of the proposal by Senator John Kyl?
"The estate tax “reform” proposal offered by Senator Jon Kyl, however, differs little from full repeal. Senator Kyl’s proposal, offered as an amendment to the Senate budget resolution, would increase the estate tax exemption to $10 million per couple and lower the top estate tax rate to 35%, with a lower rate applied to part of the value of an estate. Joint Tax Committee estimates suggest that this proposal would cost at least 77% as much as repeal."
The post goes on to say:
"Under current law, the estate tax rate has already fallen to 45%, and the exemption level is scheduled to rise in 2009 to $7 million per couple. Making the 2009 estate tax parameters permanent — as an amendment to the budget resolution offered by Senator Max Baucus would do — would itself be quite expensive, reducing revenues by about $500 billion over the 2012-2021 period or about half as much as repeal.
But going beyond 2009 law to the Kyl proposal would add about $250 billion to the ten-year cost, and more than $300 billion if interest costs are included. All of this additional cost would go toward tax cuts for the 3 in 1,000 estates large enough to owe any tax under 2009 law: those valued at more than $7 million per couple."
Other:
Senate Panel Weighs Estate Tax Overhaul (Forbes - March 12, 2008
Estate Tax Planning : Why do some Democrats object to taxing 3 of every 1,000? (WaPo editorial, March 13, 2008)
PS - In case you're wondering "what does the estate tax have to do with a PSF marketing blog?" I'm the marketing director of a business valuation firm and part of our business is related to gift and estate taxes. As such, to be successful, I have to stay on top of news that might impact our business and be aware of future opportunities (and threats). Also, other business valuation professionals have been known to read this blog (thanks!). Hope you find this of interest.
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