The estate tax is double taxation at its worst!  How dare we work all our life, many of us taking risks and building businesses and face the possibility that the business we built could face closure or a sale off to pay the estate tax when we are gone from this world!  Family owned businesses create over 60% of all new jobs in this country according to the Small Business Administration.  These businesses support charitable causes in the communities where they operate.  They provide patient, nearly perpetual capital for the businesses they conduct ensuring continuity and stability to the businesses stakeholders.  Women and minority business owners in most cases are first generation business owners.  Many of them are just now thinking about the future of their businesses when they retire.  Will they sell the business?  Will they bring in a family member to run the business?  The list of questions goes on.              

President Bush's 2001 tax act gradually raises the value of estates that are exempt from the tax while simultaneously lowering the estate tax rate until the tax is eliminated in 2010. Prior to the act, estates were taxed up to 55 percent on inherited assets above $1 million, or $2 million for married couples. In 2009 the rate would be 45 percent for assets above $3.5 million, or $7 million for married couples.

Without congressional action, the tax would revert to 2001 levels in 2011, and Bush and his GOP allies in Congress have tried unsuccessfully to make the repeal permanent. Democrats have argued that the tax affects very few people and that repeal would cost the Treasury some $500 billion over the following decade, or double that if interest on the additional national debt is included.

Obama has proposed freezing the tax at the 2009 level. "The estate tax would be effectively repealed for 99.7 percent of estates," according to Obama's campaign Web site. "This policy would cut the number of estates covered by the tax by 84 percent relative to 2000."

The Tax Policy Center estimated in August that Obama's proposal would result in $284 billion in lost revenues over the next decade. It said GOP presidential nominee John McCain's plan to cut the rate to 15 percent with a $5 million exemption would be twice as expensive.

One of the biggest issues is how hard the tax hits farmers and small business people who want to keep their businesses in the family.

The Congressional Budget Office, in a 2005 study, said that in 2000 there were 1,659 farm estates subject to the tax, and, of those, 138 had insufficient liquid assets to pay the liability. The CBO estimated that only 65 farm estates would have been subject to the tax and only 13 would have lacked the ability to pay had the exemption been $3.5 million, which is the 2009 exemption amount that Obama proposes to keep.

Supporters of the tax also argue that farms and family owned businesses get additional breaks to lessen the burden, including the ability to spread out payments over 14 years.

But opponents of the tax say those worried about losing their businesses must shell out large amounts in life insurance, accounting and estate planning fees. "The current estate tax system can deplete the estates of those who have saved for their entire lives, force family businesses to liquidate and lay off workers, and motivate people to make financial decisions for estate tax purposes rather than for business or investment reasons," said the U.S. Chamber of Commerce, which supports permanent repeal.             

Every year I review my estate plan to make sure everything is in order.  It's a somewhat morbid but necessary task. My tax accountant for the past 30 some years says this about the situation, "2010 no tax,  2011 exemption to 1 Million unless congress does something………my look on this is anyone terminal in 2009 with large estate keep on life support till 2010!

What say you?? 

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