California Estate Planning Blog by Kevin Staker

March 22, 2010

Estate Tax News – March 22 by Kevin Staker

Filed under: estate tax,Kevin Staker — Kevin Staker @ 10:25 pm
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Actually little news to report. Jay Heflin in a post on The Hill reports a member of the House Ways and Means Committee supports the Kyl-Lincoln proposal in the Senate of a $5,000,000 exemption and 35 percent rate. However, I do not see her having that much clout. In other words, little is going on of importance on this subject presently.

By Kevin Staker

March 18, 2010

More on Levin Meeting with Reporters on March 16th

Filed under: estate tax,Kevin Staker — Kevin Staker @ 4:00 pm
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Checkpoint’s “Newsstand”, a service of Thomson Reuters, reported in its daily email the exact quote from Sander Levin in his meeting with reporters on Wednesday:

On March 16, House Ways and Means Committee Acting Chair Sander Levin (D-MI) said that he would like to take up the “Bush” tax cuts and the estate tax after returning from the April recess scheduled for March 29 through April 9. “The sooner we do it the better,” said Levin.

“We need to renew the Bush tax cuts for middle class families, and not for the very high income families; renew and continue the estate tax as it was in place,” Levin said. He also said that he expects Congress to reinstate the estate tax using the 45% top rate and $3.5 million exemption that were in effect in 2009. “We need to get going on the estate tax. I think we have to write it so that we don’t disrupt estate planning in this country. The sooner we do it the better. The longer the vacuum the more difficult it becomes. We ought to do this if not before we leave, when we come back,” Levin said.

It does appear he will try to get the House to deal with the issue.  However, what the Senate will do is another matter.

By Kevin Staker

March 17, 2010

House Ways and Means Chair Reiterates He Favors Retroactively Continuing the Estate Tax with a $3,500,000 Estate Tax Exemption

Filed under: estate tax,Kevin Staker — Kevin Staker @ 12:13 am
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House Ways and Means Chairman Sander Levin met today with reporters.  He stated the committee would begin next month discussing various tax issues, including the estate tax.  He will push for retroactively re-instituting the estate tax, which expired for one year beginning on January 1st.  Businessweek quoted him as follows:

“The sooner we do it, the better,” Levin said. The lapse of the levy and a complicated capital gains tax that replaced it was making it hard for families to plan their affairs, he said.

Apparently Levin is considering giving the estate of individuals who die in 2010 the choice of escaping the estate tax or carryover basis:

One possibility being considered, he said, would let heirs choose to pay the capital gains tax that replaced the estate levy if that is more beneficial. “We have to write it so we don’t disrupt estate planning in this country,” he said.

He obviously has no idea what he is talking about.  There is no “capital gains tax” that replaced the estate tax.  Instead, what replaced it was no “step up” in income tax basis at death above $1,300,000 plus another $3,000,000 on a transfer to a spouse.   We are obviously in for a long haul if the head of the committee does not understand the issues.

I believe it is highly unlikely the Senate will agree to a retroactive estate tax for 2010.  We are already too far into the year for it to be palatable to the more conservative Senate.

Jay Heflin at the Hill reported:

He hedged on whether he would support a lower estate tax, like the one being discussed in the Senate that offers a 35 percent tax rate and $5 million exemption.

For the report of Ryan J. Donmoyer at Businessweek click here.  For the Reuters report of Kim Dixon, click here.   For the report of Jay Heflin at the Hill, click here.

March 15, 2010

Estate Tax News – March 15 by Kevin Staker

Filed under: Uncategorized — Kevin Staker @ 5:57 pm
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No word on any news in Congress re the estate tax.

Please note there is another good site of a fellow who is following the estate tax. The site is Future of the Estate Tax. It is located at It is written by Hani Sarji, who is working on his LL.M. in Taxation at New York Law School. (I just happen to have an LL.M. in Taxation from New York University in the same city.)

By Kevin Staker

March 14, 2010

Estate Tax News – March 14 by Kevin Staker

Filed under: estate tax,Kevin Staker — Kevin Staker @ 10:30 pm

The discussion continues on the FrumForum regarding the estate tax.  “Cetelus” has replied to the comments of the professor.  The post is located at    His main argument in favor of the estate tax is it really is a consumption tax, a tax that many experts believe is the best tax for encouraging savings and investment, and so job creation.

By Kevin Staker

March 13, 2010

Estate Tax News – March 13, 2010 by Kevin Staker

Filed under: estate tax,Other Kevin Staker Blogs — Kevin Staker @ 1:22 pm
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The Frum Forum has interesting dueling articles on Why the GOP Should Support the Death Tax and Why the GOP Should Oppose the Death Tax.   The Republican  Party has long opposed the federal estate tax.

In his article,Cetulus”, apparently a pen name for an estate planning attorney who wants to remain anonymous to his Republican clients, argues not only is the estate tax a great deal for taxpayers, but it is also a sound pro-growth alternative to high marginal income tax rates. Kevin Staker

On the other hand, Brian Domitrovic, a professor at Sam Houston State University and author of Econoclasts, however responds that the estate tax would only discourage work and investment.

Cetulus argues:

The GOP has long stood for a pro-growth tax system.  Thus, Republicans have favored low income tax rates, and have even argued for replacing the income tax with a more growth-friendly tax such as a tax on consumption.  The estate tax, meanwhile, is about as pro-growth a tax as one can hope for.  Not only that, but it has existed for almost 100 years. To create a more pro-growth tax system, Republicans don’t have to design a whole new tax from scratch. A pro-growth tax is already there to be exploited.

Professor Domitrovic, on the other hand, states:

Studies (such as here) of the estate tax have shown that returning to the old rate north of 50% would result in $2 trillion less in gross yearly reported estates. The lost $2 trillion represents both money entrepreneurs will spend and otherwise forsake from making in view of the estate tax, as well as the efforts undertaken (at great expense) to shield inheritances from the code. The efficiency, output, and employment consequences for the economy will be very high if we bail out to a high tax on estates – unless, of course, the self-made are so motivated that all they really care about is the thrill of the chase, or little blue ribbons.

The article in favor of the estate tax is more down to earth and understandable.  The article in opposition really does sound like it is from a college professor.  However, both have great arguments.

By Kevin Staker

March 11, 2010

Estate Tax News – March 11 by Kevin Staker

Filed under: estate tax,Other Kevin Staker Blogs — Kevin Staker @ 1:11 pm
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The Hill in an article by Jay Heflin reports that one of the most powerful business organizations that lobbies Congress has given up for now its quest for full repeal of the estate tax.  They say that:

Democratic control of Congress has prompted the National Federation of Independent Business (NFIB) to change its tune on estate tax repeal and support a less ambitious approach.

The powerful lobby for small businesses has accepted that it can’t win an outright repeal of the tax in this political climate. So it has backed bipartisan legislation that would create a 35 percent tax on estates worth more than $5 million.

They report that the NFIB believes it can revive a proposal from last year to have an exemption of $5,000,000 and a maximum rate of 35 percent.  The bipartisan bill was proposed by Senators Kyl and Lincoln with the support of 10 Democratic senators.

They report that Senator Kyl recently had told The Hill that:

[H]e opposes creating an estate tax that is retroactive to January because it could create an endless stream of litigation as taxpayers cry foul over being taxed subsequent to receiving their inheritance.

He also floated the idea of presenting taxpayers with a choice of either abiding by current estate tax law or complying with whatever level of tax is created later this year.

They also report that:

[S]ome observers recently told The Hill that the midterm elections in November might prompt congressional action on the tax as lawmakers risk political damage for not fixing the tax sooner and keeping taxpayers in the dark on the issue.

I had seen but failed to note the location of an article that stated that the author believes, and I agree, that the longer Congress delays in acting on the estate tax the more it strengthens the hand of Senator Reid and the other Democratic leaders of preventing an increase in the exemption to $5,000,000 with the 35 percent tax.  The delay would increase chances of a $3,500,000 exemption and 45 percent rate.

Personally I believe they will not act at all and we will go back to $1,000,000 with a top rate of 55 percent in 2011.

By Kevin Staker

March 10, 2010

Estate Tax News – March 10, 2010 by Kevin Staker

The Washington Post reports that Sander Levin, new House Ways and Means Chair, will address the issue of the estate tax.  They say the following:

“Levin said he is determined to make Ways and Means the “focal point” of the policy debate. He said he plans to meet this week with Senate Finance Committee Chairman Max Baucus (D-Mont.) to work out differences between the two chambers over the estate tax. Kevin Staker

The tax expired in December but is poised to spring back to life, at much higher rates, in January.”

The Wall Street Journal also interviewed Mr. Levin and states the following regarding the estate tax:

“Mr. Levin also said he wanted to create stability in the federal estate tax. The tax lapsed at the beginning of the year but will reappear in 2011, with individuals allowed to exempt as much as $1 million from a top tax rate of 55%. Mr. Levin is proposing a new top tax rate of 45%, while creating a more generous $3.5 million individual exemption.”

Hence, it appears Congress has not forgotten about the estate tax.  However, talk is cheap.  We shall see.

The Huffington Post in a posting by Bill Scher comments favorably on the estate tax in “Super Wealthy Deathly Afraid Estate Tax Would Reduce Deficit” on March 9th.  He thinks the wealthy should “pay their fair share.” Kevin Staker

Scher opposes continuing the Bush tax cuts, and believes  a 35-45 percent estate tax rate is not large enough to help hold down the deficit:

“But those massive tax breaks to the superwealthy don’t quite have the same juice they used to. Especially, the estate tax – levied on the inheritances of the wealthiest heirs in America,”

“This year, because of the Bush tax plan from his first term to gradually phase out the estate tax altogether, the estate tax is literally wiped off the books.”

Schher likes the re-distribution of wealth:

“But in 2011, it returns! Inheritance income above the $2 million threshold would be subject to a 55% tax. And after fanning the flames of deficit hysteria to squelch progressive reforms, corporate lobbyists are terrified that the estate tax would actually help reduce the deficit.”

He cites a Bloomberg report, “‘a revived estate tax at pre-2001 levels would collect more than $34 billion next year and about $410 billion through 2019.’ The wealthiest heirs having to pay their fair share and help cut the deficit. The horror!” Kevin Staker

Scher opines further:

“What’s stunning is the superwealthy’s lobbyist posse and the Senate’s conservative minority could just take what the House has already passed: locking in the estate tax at 45%, while exempting all inheritances below $7 million. That ain’t chump change! But that’s not good enough for the heirs who have no interest in paying their fair share and reducing the deficit.”

One may not agree with Mr. Scher.  However, it least the estate tax is receiving some attention

By Kevin Staker

Temporary Change in Blog Name by Kevin Staker

Filed under: estate tax,Other Kevin Staker Blogs — Kevin Staker @ 1:28 pm
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The federal estate is in disarray.  Congress and the President unfortunately have allowed the estate tax to expire for only one year.  One may, and I am one, oppose the basic concept of the Estate Tax.  The problem is that under present law the Estate Tax will return in 2011 with only a $1,000,000 exemption and a 55 percent top rate.  Human nature what it is, a strong desire to save taxes, rich people who are old or infirm will have an incentive to commit suicide before the end of 2010.  This is horrible tax policy. Kevin Staker

I am following the news daily regarding the moves, or rather the present lack of action, in Congress and by the President regarding the Estate Tax.  My thought is I will post the news I find, hopefully frequently, to aid anyone who wants to be well informed on the Estate Tax.

After the issue gets resolved, hopefully by the end of the year, I will return this theme of this blog back to estate planning in general, in particular, California estate planning. Kevin Staker

My hope that a search for news regarding “estate tax” will yield a link to this blog.  We shall see.  I have set up a search alert. Kevin Staker

By Kevin Staker

March 7, 2010

New House Ways and Means Chair at Least Talking about the Estate Tax

Filed under: Kevin Staker — Kevin Staker @ 1:57 pm
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There is a bit of talk in the House of Representatives about dealing with the Estate Tax. Sander Levin has taken over supposedly temporarily for Charlie Rangel as chair of the powerful House Ways and Means Committee. Ways and Means is the tax committee of the House.

An article in Businessweek states that Levin wants to take up the issue of the estate tax.   The committee may turn to addressing the lapsed federal estate tax first, he said.

The article talks about how the tax expired Dec. 31.  This also triggered a limit of  $1.3 million in the “step up” in income tax basis when a person dies.   Otherwise something called “carryover basis,” applies, the basis is otherwise unchanged at death.

This capital gains tax rule is only in force for 2010.

Hand in hand with that rule, unless Congress acts, the estate tax is scheduled to be reinstated in 2011 with a 55 percent rate applicable to bequeathed assets in excess of $1 million.

The House in December backed a 45 percent tax rate on estates that exceed $3.5 million in value for individuals or $7 million for a married couple. Opposing a return of the 55 percent rate in 2011, Senators Jon Kyl, an Arizona Republican, and Senator Blanche Lincoln, an Arkansas Democrat, are pushing an alternative 35 percent tax that exempts the first $5 million of an individual’s estate from tax, or $10 million per couple.

“I think the main point is we have to act,” Levin said in the article. “I think this interval is not helpful; people need to be able to plan.”

This is all well in good.  However, it takes two to tango.  It will be interesting to see if Levin actually pushes the estate tax change and gets the House to pass a bill.  However, getting the Senate to agree is a wholly different matter.

We shall see.

By Kevin Staker