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Tax-free Steinbrenner death reignites Senate push for millionaire estate tax

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Bill Radke: Congress is also paying attention to a quirk in the US tax code, thanks to the death last week of New York Yankees owner George Steinbrenner. Because of a quirk in the tax law, had Steinbrenner passed away last December, his estate would have owed Uncle Sam around $450 million. If he had lived until next year, the tax bill would have gone up to $550 million. But this year, his heirs will not pay a thing. Lots of people would like to change this situation. Joining us live from Washington is Marketplace’s John Dimsdale. Good morning, John.

John Dimsdale: Good morning, Bill.

Radke: So what are lawmakers looking to do?

Dimsdale: Well nobody wants to do nothing, because without some sort of change, the estate tax will become very onerous next year — 55 percent for every estate of just $1 million or more. So that’s some kind of action, there’s a perverse incentive for millionaires to die this year to save their heirs a lot of money.

Radke: Right. And what’s being proposed today?

Dimsdale: Well a group of Democrats wants to make last year’s estate tax rate permanent: 45 percent on any family estate worth more than $7 million. That idea is going to get some support today from unions and several wealthy people, including former Goldman Sachs head Robert Rubin and Walt Disney heir Abigail Disney.

Radke: And is that the only idea out there?

Dimsdale: Hah, hardly. Yesterday, Republican Senator Jim DeMint from South Carolina introduced an amendment to do away with what he called the death tax altogether. Liberals jumped on that idea as just a big gift to the rich that would cost the federal Treasury a trillion dollars over 10 years.

Radke: So those sound like pretty different proposals. Is there any hope of a compromise?

Dimsdale: A bipartisan group of senators wants to lower the estate tax rate to 35 percent with a $10 million exemption. But with the very public tax-free death of billionaire George Steinbrenner, there’s a push to do something in the Senate before the August recess.

Radke: Marketplace’s John Dimsdale. Thanks.

Dimsdale: Thanks, Bill.

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