Quantcast Estate Tax Fiscal Cliff - 27 Days and Counting - What will the Estate Tax be on January 1st? | Seattle Washington Estate Law |
 
 

What Others Are Saying

  • Response to the unsung inventor of Carbon Tax David G Wilson 12 Aug 2014 | 12:37 pm

    This linked with a death tax as proposed by Warren Buffet and Bill Gates Senior , and a Citizens Wage , would I believe set the world into a totally new direction , whilst retaining a competitive Capitalist and more Democratic society that is more ...

  • Same Sex Marriage, Taxes and Winning the Lottery - Huffington ... 12 Aug 2014 | 10:48 am

    Windsor was an estate tax case and where we will see the biggest economic change is when same sex couples go to file their income taxes. Looking strictly from an economic viewpoint, is it a good idea for a same sex couple to get married?

  • Media Watch: 15 Things Americans Would Know if There Were a ... 12 Aug 2014 | 10:16 am

    Take the repeal of the estate tax. In Ohio this was recently repealed by Republicans. The benefit is only realized by people with estates larger than $338,000 (as the first $338k was exempt) and realized most by people with even wealthier ...

  • How To Protect Your Real Estate Assets From Creditors 12 Aug 2014 | 8:26 am

    Doing so places the real estate beyond the reach of your creditors and may also reduce your estate tax liability. The disadvantage of this strategy, however, is that you'll lose all economic interest in and control over the real estate. Further ...

  • Why do I have to pay inheritance tax in Ireland on a cross border ... 12 Aug 2014 | 7:45 am

    Inheritance tax in many jurisdictions outside of Ireland is an Estate tax i.e. the Estate of the Deceased person pays the tax and often the beneficiary has little more to do than wait for their cheque to arrive in the post. In Ireland, however, it is the ...

 
Home Blogs Derek's Tax Blog Estate Tax Fiscal Cliff - 27 Days and Counting - What will the Estate Tax be on January 1st?
Written by Derek W. Jensen
Tuesday, 04 December 2012 17:23
Share/Save/Bookmark

There may be 27 calendar days left, but there are only 16 Planning Days left before the fiscal cliff!

It may be too late to do anything, so what are the possible outcomes for the estate tax? As I see it, here are the three most likely outcomes for the Federal Estate Tax on January 1, 2013:

Estate Tax Exemption

Gift Tax Exemption

Maximum Rate

Current Law

$5,120,000

$5,120,000

35%

Back to 2009

$3,500,000

$1,000,000

45%

Back to 2001

$1,000,000

$1,000,000

55%

Keep Current Law:

The punt solution. Congress and the President just agree to extend the current law for a year or two to gives themselves time to deal with the Fiscal Cliff. Prior to the election, I would have rated this one as the most likely result. Now this one seems the least likely of the possible outcomes. While I don't believe that President Obama will cave in on the tax issues, it is possible that he would allow a temporary extension of the current estate tax law in exchange for the Republicans capitulating on the other items of his proposal. Chance of Outcome: 5%

Revert Back to 2009 Law:

This is the plan that President Obama first proposed while campaigning for election in 2008. Although he agreed to different estate tax provisions at the end of 2010, he has again presented this as his preferred plan. Under this alternative the Federal Estate Tax Exemption would be reduced to $3.5 million, the Gift Tax Exemption would be reduced to $1.0 million, and the maximum Federal Estate Tax Rate would be increased to 45%, just as it was in 2009.

After winning reelection, President Obama appears very confident that he can get the Republicans to accept the full range of his deficit reduction proposals. However, the Republican leadership has rejected his proposal and offered their alternative. Reminiscent of the failed 2010 deficit negotiations, under the President's proposal the vast majority of the reduction would come from tax increases while the Republicans’ proposal has an equally large percentage coming from spending cuts.

With the President leaving for Hawaii and congress anxious to adjourn for the Christmas holidays, there is little time left to bridge such a large gap. Still this could all be political theatrics leading up to a behind closed doors grand resolution. Not being privy to the closed door meetings, it is hard for me to judge. But political insider Erskine Bowles, a former White House chief of staff and the former co-chairman of Obama's debt commission, puts the chances of grand deal at 1 in 3. Chance of reverting to 2009 law: 35%

Revert Back to 2001 Law:

The do nothing solution. Although neither side is advocating going back to President Clinton's estate tax law, if the President and congress are unable to agree that is where we will be. If we revert back the Federal Estate Tax Exemption will be $1 million as will the Gift Tax Exemption. To make matters worse the Maximum Estate Tax Rate will be 55%. Chances of going way back to 2001: 60%

First Posted on Surviving the Estate Tax Fiscal Cliff.

 

Locations

Seattle
1833 N 105th St., #301
Seattle, Washington 98133
Phone: (206) 547-1412

Redmond
By Appointment Only
8201 164th Ave NE Ste 200
Redmond, Washington 98052
Phone: (425) 698-2214

Estate Tax in the News