As you’ve likely heard by now, President Obama has agreed to extend the Bush era tax cuts for all taxpayers for the next two years. What you may not have heard is that this sweeping agreement also includes a fix for the looming estate tax situation.
What situation? Well… In case you weren’t aware, the estate tax disappeared for 2010, and was set to come back with a vengeance next month with the estate tax exemption dropping from $3.5M in 2009 to $1M in 2011, and the top estate tax rates jumping from 45% to 55%.
Well, that was then… Now it’s looking like the estate tax exemption will be increased to $5M and the top rate will be reduced to 35%. While the timing of this change isn’t clear, I’m assuming that they’re hoping to have it in place by January 1st.
What do you think? Does this agreement go far enough? Too far? Personally, I’ve never really been a fan of the estate tax even though it doesn’t impact the vast majority of people. I am, however, a bit surprised at how far the proposal goes. This goes well beyond restoring the status quo.