Estate tax likely to stay
The Wall Street Journal is reporting that Obama is against eliminating the estate tax. The plan he has proposed provides an exemption of $3.5 million for an individual and $7 million for a couple. The value of estates above those exemptions will be taxed at a rate of 45%. Under such a proposal, it is estimated that less than 2% of estates would be subject to taxation. The WSJ article does a nice job summarizing the history of the effort to completely repeal the tax. Repeal has long been billed as a "death tax" issue to protect family farms and small businesses. The public largely supported the repeal efforts and it appeared repeal was a possibility. However, there was always an inherent tension in the repeal group. Representatives of family farms and small businesses were willing to accept a compromise that would tax only the very largest of estates. But such compromise was unacceptable to the very affluent, such as the Mars candy family, the Gallo wine family and the heirs of the Campbell's soup fortune. Not surprisingly, those families provided much of the funding for the anti-tax movement and they opposed compromises such as a $10 million exemption that would have exempted nearly every every small business and family farm. In this economic environment, there is no longer much support for complete repeal and even the chances of a $10 million individual exemption are nil.