I enjoyed reading Hani Sarji's collection of predictions about the federal estate tax so much that I decided to conduct my own "straw poll" on what my fellow estate planning colleagues think Congress will do with the federal estate tax in 2010. To conduct the poll I sent the following email to over 50 attorneys, trust officers and accountants located throughout the U.S.:
"Hi, I am conducting a straw poll on the estate tax for my blog. The question is what do you think Congress is going to do with the estate tax in 2010 and here are the choices for answers:
A. Nothing, tax will come back on Jan. 1, 2011 with $1 million exemption, 55% tax rate
B. Reinstate tax at 2009 levels ($3.5 million exemption, 45% rate) and make it retroactive to Jan. 1, 2010
C. Reinstate tax at 2009 levels ($3.5 million exemption, 45% rate) and not make it retroactive to Jan. 1, 2010
D. Reinstate tax at 2009 levels ($3.5 million exemption, 45% rate) and give heirs of decedents who die in 2010 but prior to enactment of the new law the choice between using the modified carryover basis and the new law
E. Something else - please describe"
And here are the results:
- 68% chose A
- 11% chose B
- 7% chose C
- 7% chose D
- 7% chose E
I myself chose A, and I think that Steve Jacobson, a partner with my former law firm, West & Feinberg, P.C., located in Bethesda, Maryland, summed up what those of us who chose A believe: "Nothing is what they do best." Definitely the jaded group, turned off by the inaction of Congress at the end of 2009 and expecting the worst case scenario in 2011.
For those who chose B, C or D, the overall sentiment seemed to be that for the sake of the sanity of their clients, they really hope that Congress will bring back the exemption at $3.5 million and reinstate the step up in basis. Definitely the optimistic group, wishing for the "lesser of two evils" - a $3.5 million exemption instead of a $1 million exemption.
For those who chose E, several see Senator Sanders' billionaire surtax coming into play, particularly because of the overwhelming loss of revenues that will be suffered by letting the estates of Dan Duncan and George Steinbrenner escape estate taxes.
Who will get it right? Of course no one knows at this point in time, and the latest news on the Hill is that Congress is going to defer working on the estate tax until at least September and most likely until after the November elections. Unbelievable, isn't it? Tick tock, tick tock - hey Congress, time is running out on the estate tax, just like last year.
But what I find truly telling is the fact that all the way back in November 2008 I wrote the following - Obama Proofing Your Estate Plan - which predicted that the $1 million exemption and 55% tax rate would return and offers suggestions on how to get prepared. Some good advice back then that I believe still holds true today.
Thanks to all who participated in the original poll, and if you're interested in casting your own vote, I have recreated the Estate Tax Straw Poll for your own use and enjoyment: Estate Tax Straw Poll - Cast Your Vote! - What Do You Think Congress Will Do With Estate Taxes in 2010? Vote and then check back for updates on the current results.