October 27, 2010
Crawford: Steinbrenner to Estate Tax -- Who's Boss?Bridget Crawford (Pace) has published Steinbrenner to Estate Tax: Who's Boss?, 129 Tax Notes 477 (Oct. 25, 2010):
In this article, Prof. Crawford describes some of the tax problems that may be facing the estate of George Steinbrenner, the late owner of the New York Yankees.
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Under the Carlton test, exactly what is a reasonable period of time for a constitutional retroactive tax and how is it measured and defined?
How would it be "reasonable" to impose a retroactive estate tax now that we have passed the form 706 due date for January estates?
Posted by: DPD | Oct 27, 2010 10:07:43 AM
In the Carlton case, lawmakers gave notice that they would disallow an obscure tax deduction shortly after they became aware of a quirk in the tax code.
This year with the estate tax, lawmakers on both sides of the aisle and President Obama have made it clear to 2010 estates that they favor giving 2010 estates a choice between 2009 and 2010 law.
The loudest and most powerful proponents of retroactivity at the end of 2009, when estate tax legislation failed, were Senate Finance Committee Chairman Max Baucus and Treasury Secretary Timothy Geithner.
However, as early as in February of 2010, House Ways and Means Committee Chairman Charlie Rangel and then Sander Levin made it clear that they supported giving 2010 estates a choice between 2009 and 2010 law.
In May, Max Baucus signaled he was backing away from pure retroactive reinstatement and in July made it clear that he favored giving executors a choice. In September, the Obama Administration confirmed its position on the issue. Michael Mundaca, Assistant Secretary of the Treasury for Tax Policy, indicated the Obama Administration's support of the option for executors to elect to apply 2009 or 2010 law.
Now that we have passed the due date for form 706s for January estates in past years, we have passed what anyone could consider to be a reasonable period time for a retroactive estate tax. To administer such a tax would require estate tax legislation unlike any in prior existence. At this point, it is probably too late to give 2010 estates a choice, now that we have passed the deadline.
It goes without saying that it would be immoral to impose a retroactive estate tax at this late date, as Supreme Court Justices concluded in the Carlton Case. However, it is now not only immoral, but impossible to impose from a practical standpoint as it had been administered in past years, not to mention unconstitutional due to these circumstances.
Posted by: DPD | Oct 27, 2010 10:47:47 AM