Obama's agreement with Republicans turns to the estate tax

The estate tax, also known as the death tax, only affects about 3,600 people a year.


STEVE CHIOTAKIS: The Senate votes today on that tax deal worked out between President Obama and GOP leaders. It'll likely pass the that chamber. But the House is a little harder to predict because a lot of Democrats are angry over concessions the White House made to Republicans concerning taxes on the wealthiest Americans. Forget about high income-earners and their tax rates, there's also the business of the estate tax.

Fortune magazine's Allan Sloan is here to talk about it. Good morning Allan.

ALLAN SLOAN: Good morning Steve.

CHIOTAKIS: Update us on where we are in the estate tax debate.

SLOAN: Where we are is this legislation pending that would adopt a new set of rules effective the beginning of next year, making estates $5 million or less tax exempt.

CHIOTAKIS: Now correct me if I'm wrong, there's been no inheritance tax or estate tax if you will, in 2010, right?

SLOAN: That is right. But at the beginning of next year if nothing happened, the estate tax would come back the way it was in 2000.

CHIOTAKIS: And what changes, Allan, after the first of the year?

SLOAN: The value and the compromise, the Obama/Republican compromise is a $5 million estate and a tax rate of 35 percent on everything above that and that would affect roughly 3,600 estates a year. That's what we're talking about. Where as, had people with that kind of money had the good sense to die in 2010, there would be no estate tax.

CHIOTAKIS: How much interest, Allan, do you think people have in this? Does the average Joe really care about estates? I mean most Americans don't have estates, right?

SLOAN: You know that, and I know that, but most people don't know that because over the years, the estate tax has been changed to the death tax, which makes it sound like it applies to everybody who dies, and it doesn't. It's an example for the triumph of propaganda over reality.

CHIOTAKIS: Alright, Fortune magazine's Allan Sloan this morning. Allan, thanks.

SLOAN: You're welcome Steve.


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