When Congress reconvenes in September, watch for the House of Representatives votes to repeal the federal estate tax. The bill was ready for a vote — 221 sponsors had signed on — before the August break, but backers felt it best to hold off. A vote closer to the November election will help Republican candidates reinforce the party’s anti-tax platform.
The estate tax is a perennial battle ground for Congress. Supporters of the repeal say it is unnecessary and have positioned its repeal as an important step in general tax reform. Repeal opponents, including President Barack Obama, say the move will only benefit the rich, instead of providing relief to the struggling middle class. In fact, the White House’s 2015 budget included a proposal to increase the estate and gift tax rate to 45 percent while lowering the individual exclusion to $3.5 million; individual exclusion for gifts would be $1 million.
The bill does not stop with the repeal of the estate tax. The generation-skipping transfer tax would end as well.
The generation-skipping transfer tax comes into play when, say, a grandparent gives a grandchild a large amount of cash — the exemption is $3.5 million — or transfers a large amount of money or high-value assets into a trust that names a grandchild as beneficiary. The law sets the age difference between the donor and done at 37.5 years, so it could be a great-grandchild as well. It’s important to note, too, that the transfer can occur during the lifetime of the grandparent or after his or her death.
Again, the Democrats see the repeal as a gift to the rich. Middle class Americans cannot spare that kind of cash if they have it at all, especially those who are nearing retirement age.
As we said in our Aug. 4, 2014, post, Missouri does not have an estate tax. The only tax on estates here — for the present, at least — is levied by the federal government.
Source: Crain’s Wealth, “Plan to ax estate tax gains momentum in House,” Mark Schoeff Jr., July 24, 2014
Crain’s Wealth, “Plan to ax estate tax gains momentum in House,” Mark Schoeff Jr., July 24, 2014
Related Posts: The role and duties of the executor of a will, The probate process and living trusts, Dying without a will in Missouri
