Neither the President nor anyone with any power in Congress has said anything relevant lately regarding the estate tax. However, this author believes statements by President Obama and Senate Minority Leader McConnell give us some facts from which we can try to divine what will happen regarding the estate tax.
First, the Huffington Post quotes the communications director for Mitch McConnell, the Senate Republican leader, as stating the senator would consider a compromise of extending all the “Bush tax cuts” for two years. The rationale would be to not raise taxes on anyone when we are worried about a “double dip recession”. In other words, they admit they would “punt” on the issue for now. One would assume that such an extension would include reinstating the estate tax in 2011 at the 2009 level with a $3,500,000 exemption and a 45 percent top rate and the old complete step up in income tax basis. Allowing the $1,000,000 exemption to come back under the present law for 2011 would seem to be unacceptable to a large majority of Senators. ( The Senate is where these issues will be decided because of the filibuster rule.)
On the other hand, President Obama has not recently spoken about the estate tax. However, he said today that he continues to be firmly against continuing the Bush income tax cuts for higher income folk. Many media outlets, including the New York Times, quote him calling for an end to the Bush-era tax cuts for the wealthy, saying the country cannot afford $700 billion in tax breaks that benefit “millionaires and billionaires.”
This author believes one thing: Pres. Obama has shown himself several times to stick to what he believes is right. The prime example would be his health care plan that was passed in the face of clear opposition from a majority of Americans. This author sees the most likely fix for the estate tax coming as part of them dealing with the “Bush Tax Cuts”. If nothing happens on such issue, this author believes nothing will happen on the estate tax either
This author believes what we continue to have is a game of chicken between the two forces or to use another analogy: the irresistible force meeting the immovable object.
The result would be a gigantic explosion but the result would be nothing happening in the end. The irresistible force will in the end be stopped by the immovable object. Hence, there may be quite a bit of things said. However, this author sees no sign of compromise. Hence, the next two months will go by, with the November election, with both sides pointing the finger at the other and trying to gain political advantage from the stalemate. Then the question will be after the election will they come to their senses and stave off the $1,000,000 exemption and 55 percent rate? The longer we go, the more this author believes they will not.
By Kevin Staker