Death Is Sure But Maybe Not The Taxes

The Economic Growth and Tax Relief Reconciliation Act of 2001 substantially revised the estate, gift, and generation skipping taxes.  One provision was that the estate tax and generation skipping tax would disappear in 2010.  If nothing is done before 2011, the estate and generation skipping taxes go back to where they were before 2001; i.e., a lower exemption and higher rate.  I’ve always maintained that this compromise was at least in part a bet by the Democrats that they would be in control of Congress before 2010 so they could rewrite the tax as they preferred.  A bet that they won.  No one expected the tax to actually lapse in 2010.  However, health care reform has apparently distracted Congress and so no new estate tax bill has been passed.  Consequently, if you’re one of the 5,500 Americans to whom the estate tax might have applied, 2010 is a good year to die.  In fact, according to “The Wall Street Journal” some very ill wealthy Americans have been trying to hang on until January 1, 2010.  Theoretically, Congress could try to pass a law during 2010 making the tax retroactive to 2010, but that may not pass constitutional muster.