Wednesday, December 12, 2012
As I have previously discussed, President Obama and his Democrats in Congress are in conflict with each other and the Republicans in Congress over the future of the estate tax. As of this writing, members of Congress still have not made any progress on a compromise. This situation is made worse by the fact that the Democrats are divided over this issue.
The Tax Policy Center provided the following statistics. If the current tax scheme, a $5.12 Million estate tax exemption with a 35% tax rate on income that exceeds the amount, is extended the government is likely to receive about $161 Billion from the tax by the year 2021. If President Obama succeeds in getting his proposal, a $3.5 Million estate tax exemption with a 45% tax rate on income that exceeds the amount, the government will likely receive $258 Billion from the tax by the same year. Now, if nothing happens and the $1 Million estate tax exemption with a 55% tax rate on income that exceeds the amount is re-implemented, the government stands to earn $531 Billion by 2021.
The Tax Policy Center also accessed the situations of several actors, including the farmers and ranchers. The center argued that farmers only account a little over 1% of the individual who actually pay the estate tax. In contrast, 80% of the estate tax is paid by the Top 1% of earners in the United States, the Top .01% pay nearly half of the estate tax.
See Robert Frank, Next Battle on the 'Cliff's' Edge: Estate Taxes, CNBC, Dec. 10, 2012.
Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.