New Estate Tax Rules Should Expire After 2012
Shrinking the Tax Beyond the 2009 Level Is Unaffordable and Unnecessary
"The tax-cut compromise enacted in December established estate tax rules for 2011 and 2012 that are considerably weaker than those in effect in 2009, the last year before the tax temporarily expired in 2010. The new rules will cost about $23 billion more than reinstating the 2009 rules over the same two years, yet will benefit only the largest one-quarter of 1 percent of estates, since they are the only ones that that would owe any estate tax under the 2009 rules.
Taxable estates will receive more than $1 million apiece in tax breaks this year from the new rules, on average, and estates worth more than $20 million will receive an average of nearly $3.8 million apiece. In light of the nation’s serious long-term budget problems — and proposals to slash a wide range of government services, particularly Medicare, Medicaid, and programs for low-income Americans — it would be irresponsible to extend these new rules beyond 2012."
Tax Had Already Weakened Considerably Under 2001 Law
"The 2001 tax legislation phased down the estate tax considerably. By 2009, the value of estates exempt from taxation had risen to $3.5 million for individuals (effectively $7 million for couples), up from $1 million for individuals ($2 million for couples) scheduled under prior law, and the marginal tax rate on the value of an estate above these thresholds fell from 55 percent to 45 percent. As a result, a tax that affected only the country’s largest 2 percent of estates in 2001 touched only the largest one-quarter of 1 percent of estates by 2009."
New Estate Tax Rules Should Expire After 2012 — Center on Budget and Policy Priorities