California Estate Planning Blog by Kevin Staker

September 28, 2010

My Present Prediction: Better Than Even Odds of No Estate Tax Fix

Filed under: estate tax,Kevin Staker — Kevin Staker @ 6:25 pm
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The Hill reports the Democrats in Congress will try to cram 20 bills into the post-election lame duck session.  I predict few of the bills will pass, including the estate tax fix.  The reason is they all must go through the Senate.  At least one Republican must side with the Democrats to avoid a filibuster.  The Republicans, even the more liberal, will only allow to pass what needs to be passed.  They will not want a Democratic majority Congress to get the credit.  They will want the credit (at least in the House where they will almost surely have a majority, close but no cigar in the Senate thanks to McDonnell getting the nomination in Delaware, where she will lose (how is that for stream of consciousness?))

I do believe the Democrats will get a Republican or two to side with them on extending the Bush tax cuts for only the middle class.  However, I believe more likely than not that bill will be trimmed down to only that issue.  I believe issues such as the estate tax, capital gains and dividends, will all be left out in order to get the votes.  Hopefully, I am wrong.  We shall see.

By Kevin Staker


September 27, 2010

Congress Will Delay Addressing the Estate Tax Until After Election

Filed under: estate tax,Kevin Staker — Kevin Staker @ 11:38 pm
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Multiple sources confirm as a certainty what we suspected on Friday:  Congress will not address the income tax cuts, as well as the estate tax mess, before the mid-term election.  Hence, we will need to wait until the “lame duck session” after the election for a resolution.  Even then it is not clear if they can pass a tax act.   I now go back to my prior prediction that we stand a 50-50 chance of Congress doing nothing on income taxes as well as estate taxes.  Hence, we may end up in 2011 with the same result we have seen in 2010: Congress doing nothing and so changes in the law happening (a $1,00,000 estate tax exemption for example) without anyone doing anything.  What a mess!

By Kevin Staker

September 24, 2010

Looking Unlikely Senate Will Vote on Estate Tax Before the Election

Filed under: estate tax,Kevin Staker — Kevin Staker @ 7:13 pm
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Multiple news outlets, including Politico and The Hill, report appearing unlikely Baucus has found the 60 votes he will need to go forward.  Senate Democrats appear to not want to force a vote unless they know they can avoid a filibuster.

(Sorry for shortness of this post.  Actually fairly miraculous how I am doing this from a ridgeline at 10 thousand feet in Utah in the middle of nowhere, Skyline Drive above Fairview Utah)

By Kevin Staker

September 22, 2010

Senate Majority Leader Reid Intent on Forcing Vote on Middle Class Tax Cuts (and the Estate Tax)

Filed under: estate tax,Kevin Staker — Kevin Staker @ 6:28 pm
Tags: , reports that Senate Leader Reid is intend on forcing a vote on the middle class tax cuts before Congress adjourns.  Senate Reid stated to David Rogers at Politico:

“I am working hard for a vote,” the Nevada Democrat told POLITICO, and a second senior Democrat predicted there is a 75 percent chance of a showdown with competing Republican tax alternatives next week.
Read more:

Politico reports that the estate tax fix will be part of the tax bill Senate Finance Chair Baucus intends to release (at least to the Senate Democratic caucus) today.

Jay Helfin at The Hill reports roughly the same status.

By Kevin Staker

September 21, 2010

Senate Finance Chair to Update Democratic Colleagues on Tax Cut Bill on Thursday

Filed under: estate tax,Kevin Staker — Kevin Staker @ 9:59 pm
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Fox News reports Senate Finance Chair Baucus will meet with the Senate Democratic caucus on Thursday and update them on his draft of the bill to extend the tax cuts.   Baucus is working with the Joint Committee on Taxation on the provisions so they will fit under the “Pay-Go” rules.  The word is the estate tax fix will be part of the bill.  It appears he and Senate Leader Reid are determined to have a vote on these tax issues before the Senate adjourns for the mid term election.

Also, Jay Heflin at The Hill reports Baucus will not hold a Senate Finance Committee meeting on the issue of the tax cuts.  He stated because there is not enough time.  However, one suspects it is because he does not want to give the Senate Finance Republican Committee members a forum for advocating their position.

Corey Boles at just published an even more detailed analysis of the procedural wrangling going on.

By Kevin Staker

September 20, 2010

Some Rumblings on Senate Vote; Interesting Estate Tax Debate in the Wall Street Journal

Filed under: estate tax,Kevin Staker — Kevin Staker @ 4:28 pm
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No hard news on Senate Leader Reid forcing the showdown in the Senate on the tax cuts.  The New York Times reports Reid has not yet scheduled the vote. However,  David Dayen at firedog reports the Senate vote may as early as next Monday.  He has an excellent analysis of the procedural intricacies in the Senate and the House.  Christina Bellantoni at also has a good technical analysis of the procedure.  Greg Sargent at WaPo with a follow up article stating the Democrats in  the Senate are planning their move forward.  Says might be an amendment to another bill.  If that the case, the estate tax might not be addressed I would fear.

Interesting dueling opinion pieces in the Wall Street Journal.  The authors are two academics for whom I have great respect and have heard speak many times over the last couple of decades.

I became acquainted with each through the USC Tax Institute.  I remember Michael Graetz spoke to the Institute back in 1986 when I believe he was the tax policy head for the U. S. Treasury and at the Institute announced for the first time the details of the Tax Reform Act of 1986.  Ed McCafferty has been with USC Law School for many years and has been a delight to hear speak on various tax issues.

Mr. Graetz who is now a professor at Columbia Law School.  He opines that the estate tax is fair, and we need the revenue. Mr. McCafferty, on the other hand, opines that the estate tax is unfair, and there is a better way.   Both have persuasive arguments.  However, politically Graetz will prevail.  The vote in the Senate to repeal the estate tax lost 39-61 a few weeks ago.  On the other hand, this author believes it is now more likely that we will have a $3,500,000 estate tax exemption as opposed to only a $1,000,000.  Hence, the estate tax will have been repealed for 98 percent of all estates, and so McCafferty will get his way, 98 percent of the time.

By Kevin Staker

September 17, 2010

Washington Post Reports Some Details of Coming Tax Bill

Filed under: estate tax,Kevin Staker — Kevin Staker @ 12:57 pm
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The Washington Post reports the major points of the bill Senate Democrats (one assumes mainly Senate Finance Chair Baucus) are putting together on the major tax issues.  The article states the following:

Senate Democrats are assembling a bill that would permanently extend tax cuts for the income thresholds Obama proposed; permanently set the estate tax at 2009 levels; and limit the number of people hit by the alternative minimum tax through 2011. Democratic aides said such a bill would increase deficits by about $1.9 trillion over the next 10 years, compared with the nearly $4 trillion bill McConnell has proposed.

This author briefly was an aide to a U. S. Senator in the mid 70’s.  Getting legislation  passed now is no different from then.  What Baucus is surely doing is his aides are finding out what needs to be put in the bill to get all of the Democratic senators and a couple of Republican senators to accept it.  Because the cost is half of the reported $3.9 trillion to make the Bush tax cuts permanent and fixes the AMT for a couple of years, surely it only extend the tax cuts for the middle class for only a few years.  This is likely needed to get the vote of Republican Senator Voinovich who has stated he believes the tax cuts should not be extended for anyone.

This author continues to believe Baucus will design a bill that will pass and will pass before the election.

By Kevin Staker

September 16, 2010

It is Getting Interesting on the Estate Tax

Filed under: estate tax,Kevin Staker — Kevin Staker @ 1:07 pm
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Just as this blog predicted it appears the Senate Democrats are preparing to force a vote on taxes.  The Politico reports that Senate Finance Chair Baucus is preparing a tax bill to be brought to the Senate floor for a vote.  They state that the cost would be $2 trillion in tax cuts as opposed to the $4 trillion that would arise out of the Republican proposal.  Almost certainly the proposal will have the going back to 2009 estate tax fix.

This author believes the Democrats will get Voinovich and at least one other Republican to vote to prevent a filibuster and the bill will pass.   In the end they will not want to vote against a middle class tax cut.  And the estate tax fix will ride along with it.

It is getting interesting.

By Kevin Staker

September 15, 2010

This May be Getting Interesting

Filed under: estate tax,Kevin Staker — Kevin Staker @ 8:23 pm
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The following is a scenario being discussed (at least at the Huffington Post):

Senate Leader Reid first would let the Senate vote on the Republican plan to extend income tax cuts for all (the bill includes the Kyl-Lincoln proposal of a phased in $5,000,000 estate tax exemption with 35 percent rate).  This would give political cover to several Democratic Senators, such as Nelson, by allowing them to vote for extension of the tax cuts for all.  The bill would be defeated (Reid had better count the votes first very carefully, however), coming just short of a majority.

Next, the Democrats would bring to a cloture vote in the Senate the Democratic proposal extending the income tax cuts for all but the more well off.   This bill supposedly would include the $3,500,000 estate tax exemption with a 45 percent rate.  The key, of course, will be whether they get a Republican or two to vote for cloture (cutting off the certain Republican filibuster), as well as keeping all the Democrats on board.

The rationale of the above is to give political cover to the Democratic senators who need to vote for extending the tax cuts for all.  They can then vote for the Democratic bill stating they will not “hold hostage” the middle class income tax cut extension because of their ideologically “pure” belief in not raising anyone’s taxes at this time.

Hence, for the estate tax, the key will be can the Democrats get some Republicans to allow a vote on the middle class only (and estate tax) extension?  They possibly can, they just got two votes on the small business bill.

We shall see.

By Kevin Staker

Senate Finance Chair Indicates Estate Tax Fix Will Be Added to Middle Class Income Tax Cut Extension Bill

Filed under: estate tax,Kevin Staker — Kevin Staker @ 12:33 pm
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David Rogers at reports that Senator Baucus, Senate Finance Chair, has stated that the estate tax will be part of the bill that would extend the middle class income tax cuts.  The article states the following:

Long-delayed small-business legislation broke through in the Senate Tuesday, even as Democrats signaled they want to add permanent estate tax relief to their draft bill extending middle-class tax breaks due to expire at the end of this year.

Senate Finance Committee Chairman Max Baucus (D-Mont.) said he favored making both the estate and the middle-class rates permanent and believed his caucus is moving in that direction, even if it means adding to future deficits.  Read more at

That is a relief to hear.  Up to this point we had not heard anyone state that the estate tax fix (increasing the 2011 exemption from $1,000,000 to at least $3,500,000) would be part of the middle class income tax cut extension proposed by the President and most Democrats in Congress.

By Kevin Staker

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