This is not my first article about the current failure of our Congress to act on the replacement of the estate tax which expired at the end of last year and I am certainly not the only one following this oddity. All of a sudden it has dawned on me that maybe the lack of Congressional action is not so much a failure of Congress to get its act together as it may be a focused plan to back into what would become a massive tax increase b y doing nothing.
One would think that , even with the pitched battles fought over health care and reform of the financial system, Congress would have found time to deal with the expiration of the estate tax. All of a sudden, however, this has disappeared from the Congressional radar screen and does not seem at all on the horizon.
Folks are overlooking what is going to occur on the first of January 2011 if no new bill is enacted. All of the graduated estate tax reductions put into place over the past ten years or so will sunset and after a year of having no estate tax, we will revert back to the old one million dollar credit shelter limit. In New York, the combined state and federal estate tax on the second million dollars of a decedent’s estate will be as high as sixty per cent!
In an economy that is recovering from the tailspin that almost put us into another great depression, government needs to find ways to pay back the funds advanced for the stimulus programs and the bailouts.Even so, Americans hate to eat their vegetables and are loathe to make the tough choices needed to save the economy for our grandchildren. Tax increases are the political third rail and few politicians have the courage to enact them, much less come out front and advocate for them. That said, doesn’t it seem easier just to let taxes increase by default without going on record in an election year? Very quietly, it would seem that some radical changes in our tax laws are around the corner — and will come about without a single speech, filibuster or vote taking place on the floor of the Congress.