TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, March 31, 2009

WSJ: Night of the Living Death Tax

Wall Street Journal editorial:  Night of the Living Death Tax; Obama's Budget Quietly Resurrects It in 2010:

Lawrence Summers, President Obama's chief economic adviser, declared recently that "Let's be very clear: There are no, no tax increases this year. There are no, no tax increases next year." Oh yes, yes, there are. The President's budget calls for the largest increase in the death tax in U.S. history in 2010.

The announcement of this tax increase is buried in footnote 1 on page 127 of the President's budget. That note reads: "The estate tax is maintained at its 2009 parameters." This means the death tax won't fall to zero next year as scheduled under current law, but estates will be taxed instead at up to 45%, with an exemption level of $3.5 million (or $7 million for a couple). Better not plan on dying next year after all. ...

[B]y raising the estate tax in the name of fairness, Mr. Obama won't merely bring back from the dead one of the most despised of all federal taxes, and not merely splinter many family-owned enterprises. He will also forfeit half the jobs he hopes to gain from his $787 billion stimulus bill. Maybe that's why the news of this unwise tax increase was hidden in a footnote.

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Well, personally, I see this as good most estates won't pay the estate tax AND the heirs will get a step up in basis...the one year lack of estate tax has to be one of the absolutely worst ideas that Congress has come up with...until the hits just keep on comin'

Larry Massey, CPA
Folsom, CA

Posted by: Larry Massey, CPA | Mar 31, 2009 11:29:11 AM