I’ve written before about how 2010 is “The Year Without An Estate Tax”. You can read my past posts, but to sum up, in 2009 the estate tax exemption, that is the amount one could die with before being subject to the tax was $3.5 million, and the rate of tax for everything over that was 45%. In 2011, as things now stand, the lifetime exemption will be $1 million and the rate of tax will be 55%.
However, for 2010 and 2010 only, there is no estate tax.
Everyone thought that Congress would “fix” the 2010 year problem before it happened. They knew it was coming for nine years. Then, some people thought, or still think, that Congress would in 2010, pass a law making the estate tax retroactive back to January 1. The constitutionality of doing this is questionable, but many think it’s doable.
Of course, as time goes on, any attempt to make it retroactive back to January 1 becomes less and less likely. This is especially true if, before Congress made the estate tax retroactive, there was a death resulting in a sufficiently large estate that would have the motivation and the resources to challenge the estate tax, which could take a number of years.
Well, it happened.
According to the Wall Street Journal, in March, oil magnate Dan Duncan died, and at the time of his death his estate was estimated to be worth $9 billion. Now, it’s likely that if he died last year or next year, he would have engaged in advanced estate planning techniques that would have decreased the amount of taxes that he owed. Still, I doubt that his taxes would have gone to zero.*
So today, April 15th is tax day. How much in taxes did you pay last year? How big is our deficit? And how much does it upset you that Congress’s legislative malpractice cost the treasury a few billion dollars?
*On a side note, the WSJ Article and the blog that it links to, states that, “if his advisors were up to the job, the bulk of his remaining wealth was probably held in trust, so it probably wouldn’t be subject to the estate tax either way.” That’s inaccurate and misleading. Putting your assets into a trust do not exempt it them the gift or estate tax.