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The December 31, 2012 sunset date for the estate tax, as provided by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, is once again quickly approaching, and in typical fashion there is a divide over what the fate of the estate tax should be. With the Obama and Romney campaigns in full swing, both have established their position on the estate tax.
The Romney tax plan includes the elimination of federal estate taxes. Romney defends his position by suggesting that high tax rates are applied to a narrow tax base and these high rates discourage work, entrepreneurship, savings and investments. www.mittromney.com/issues/tax.
At a campaign speech in Ohio, President Obama criticized Romney's tax plan, asserting that the proposed tax cuts would not reduce the deficit, improve education or infrastructure, or improve the job market, but would only provide tax cuts for the wealthy. See Obama Says Romney Tax Plan Would Shift Burden to Lower-Income Taxpayers, taxanalysts® Tax Notes Today, August 2, 2012
Members of Congress are just as divided as the presidential candidates. The following are recent bills introduced into Congress:
H.R. 6279, the Death Tax Repeal Act, introduced on Aug 2, 2012 by Representative Tim Griffin, R-Ark, proposes a complete repeal of Subtitle B, relating to the estate, gift and GST taxes. See taxanalysts® Tax Notes Today, August 15, 2012.
S. 3403, introduced on July 19, 2012 by Senator John Boozman, R-Ark, also proposes a complete repeal of Subtitle B, relating to the estate, gift and GST taxes. See taxanalysts® Tax Notes Today, August 2, 2012.
H.R. 16, the Sensible Estate Tax Relief Act of 2012 was introduced on July 30, 2012 and proposes to extend the estate, gift, and GST taxes through 2013 with a 45 percent top tax rate and a portable $3.5 million exemption. See taxanalysts® Tax Notes Today, July 31, 2012.
The McCaskill bill introduced in the senate on July 25, 2012 would also extend the estate tax through 2013 with a 35 percent top tax rate and a $5 million portable exemption amount. See taxanalysts® Tax Notes Today, July 26, 2012.
So practitioners are once again left to wonder and speculate about the future of the estate tax. Practitioners should use caution when advising clients especially since it seems unlikely that the estate tax will be entirely repealed, but will be extended in some form or another before the year end.
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