Estate Taxes: Obama and McCain talk about 2010
The “death tax” debate is part of this year’s presidential campaign. According to CNN, both candidates will work to make estate taxes return after the 2010 repeal. You might recall that exemptions are increasing in 2009, to $3.5 million and a 45% rate before the estate tax goes away completely in 2010. And if nothing is done, in 2011 the tax rates return to prior levels, with a $1.5 million exemption and a 50% rate.
Obama favors fixing the 2009 levels for 2011 and ongoing, with a $3.5 million exemption and a 45% rate. Married couples will be able to combine their exemptions, eliminating estate tax on many estates under $7 million. Nick Shapiro, campaign spokesman for the Obama campaign cited the Congressional Budget Office “Senator Obama’s plan would completely exempt 99.7% of estates from taxation.”
McCain wants to reduce the rate from 45% to 15%, similar to the capital gains rate. And he would like to raise the exemption to $5 million ($10 million for married couples.) Doug Holtz-Eakin, policy advisor for the McCain campaign says “The goal is to allow small businesses to grow and expand.”
Critics of Obama’s plan say his plan is unappealing to business owners, while critics of McCain’s plan call his approach fiscally irresponsible, benefitting the wealthiest estate owners with no way to pay for it.
Both candidates agree on one thing, a return to estate taxation after the single year repeal of 2010 - so tax planning is still a vital part of smart estate plans.
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