2011 estate tax would slam inheritors
TEXT OF STORY
Steve Chiotakis: If you’re wealthy and you die next year, your inheritors will be in pretty good shape from a federal tax perspective. That’s thanks to a convoluted legislative compromise. In 2010, the nation’s 45 percent estate tax drops to zero, but it comes back with a vengeance the year after. Marketplace’s John Dimsdale reports from Washington on congressional efforts to even out the roller coaster ride.
John Dimsdale: If you’re waiting for a big inheritance, you’ll be especially anxious when next December rolls around.
Joel Slemrod: Some people have called this the “throw mama under the train” aspect of the current estate tax law.
University of Michigan professor Joel Slemrod says if a rich mama dies on December 31, 2010, her heirs pay no tax. One day later and they’ll owe Uncle Sam 55 percent of her estate.
To avoid that scenario, Congressman Earl Pomeroy, a North Dakota Democrat, wants to extend the current tax, which hits estates bigger than $3.5 million.
Earl Pomeroy: The real effect of it is, is to make the estate tax go away for 99.75 percent of the people in this country.
Business groups, which used to advocate eliminating the estate tax, are backing a permanent rate of 35 percent on estates above $5 million. But Pomeroy says that’ll never fly, since the government needs the extra revenue.
In Washington, I’m John Dimsdale for Marketplace.
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