Assistant Treasury Secretary for Tax Policy Michael Mundaca, appearing on C-SPAN's Newsmakers program Sunday, said that giving taxpayers an option to pick which year's estate law, 2009 or 2010, they want to apply is "one possibility."
The federal estate tax, as everyone knows by now, died this year.
It's scheduled to return on Jan. 1, 2011, but in a much less favorable form (with only $1 million in estates exempted; a 55 percent tax rate) than applied in 2009 when the law was last on the books. That year, the exclusion amount was $3.5 million and there was a 45 percent tax on estates worth more than that.Congress has been circling a possible estate tax fix for more than a year, but nothing has happened.
Gone is not good for all: For some estates, the lack of an estate tax is a fantastic deal. Just ask the families of the dearly departed uberwealthy Dan Duncan and George Steinbrenner.
But heirs of smaller estates, which Mundaca said is 99 percent of them, might not benefit as much. The big problem is that the step-up in inherited property basis also went away when the estate tax disappeared.
So, said Mundaca, offering the choice to apply the 2009 estate law to their 2010 taxes is "one of the options" being considered by the Administration as a way to lessen the estate tax burden on certain taxpayers.
Of course, time is slipping away and there are administrative issues to work out. And just because Obama likes the idea won't make it so. Just ask the GOP.
But a dual estate tax idea has been kicked around for a while. I blogged back in May about support for allowing a two-tiered estate tax system this tax year. Having presidential support might help make it so.
Although this would add another level of complexity, many believe it would be preferable to offer the choice rather than trying to make any law retroactive.
As for 2011, Mundaca reiterated the Administration's support for an estate tax at 2009 levels.Mundaca on more than estate taxes: Other issues the Treasury official addressed included the expiring Bush tax cuts (move along, people; no new news here), some specifics on possible dividend rate hikes (keeping the increase to 20 percent, not 40 percent as is possible) the AMT ("it's time to take this head-on" instead of temporary annual fixes), tax code simplification and/or tax system overhaul and the growing Congressional support for repeal of the new Form 1099 reporting requirement.
As for the Form 1099 issue, the White House is seeking to preserve a system that keeps the value of tracking income but is not overly onerous, said Mundaca. Does that offer enough wiggle room for everyone? Didn't think so.
Mundaca's remarks on the Form 1099 reporting rule start at at 16:30 of the half-hour interview. The estate tax discussion begins at around 18:30 and is revisited at 23:10 of the program. Put on your headphones and enjoy!
- Senate rejects permanent estate tax death
- Estate tax inching along
- The Boss' estate tax bonanza
- Texas billionaire vs. the estate tax
- A 'responsible' estate tax
- Estate tax is still dead, but dual options for heirs being considered
- Lawmakers seek repeal of new 1099 forms
- Effort to repeal 1099 reporting fails
- Tell the IRS what you think about the new Form 1099 reporting requirement
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