Back in January 2011, I posed the following question in an estate tax straw poll: What do you think Congress will do with estate taxes for 2013 and beyond? Fast forward to October 2012, and there are currently over 800 votes in the poll, which gives the following five choices for answers:
- Completely repeal the estate tax
- Extend the 2011/2012 levels of $5 million+ exemption, 35% tax rate
- Extend the 2009 levels of $3.5 million exemption, 45% tax rate
- Nothing, estate tax levels will revert to $1 million exemption, 55% rate on Jan. 1, 2013
- Something else
Early on option #2 - extend the 2011/2012 estate tax exemption and rate - was the favorite choice, and it still has the most number of votes by far even today.
With regard to the other options, #5 - do something else - has always only a handful of votes, but votes among the other three options had been for the most part evenly divided. Until recently, that is. In the past month or so, votes for option #1 - completely repeal the federal estate tax - have started to lag behind votes for option #3 - extend the 2009 estate tax exemption and rate - and option #4 - do nothing - which have remained relatively neck and neck.
Interestingly enough, option #3 is what President Obama has supported all the way back to the 2008 presidential election, while Mitt Romney supports option #1. But over the summer the Senate passed a bill called the Middle Class Tax Cut Act, which extends the Bush-era income tax cuts through 2013 for all taxpayers except single filers earning above $200,000 and joint filers earning above $250,000, but it deliberately failed to address the estate tax because apparently certain "blue dog" Democrats baulked at including the Obama-favored 2009 estate tax rules in the bill. On the other side, the House passed a bill called the Job Protection and Recession Prevention Act, which extends all of the Bush-era tax cuts through 2013 and also includes a one year extension of the 2012 estate tax rules.
So, if the Senate bill becomes law, then option #4 - do nothing about estate taxes - will result in a $1 million estate tax exemption and 55% estate tax rate, and if the House bill becomes law, then option #2 will lead to the extension of the current $5.12 million estate tax exemption and 35% estate tax rate.
Of course, neither result is what President Obama wants or Mitt Romney wants. So, in the end, what will really happen? As I've had to say many times in the past year, your guess is as good as mine.
To vote in the poll, follow this link: New Estate Tax Straw Poll - Cast Your Vote! - What Do You Think Congress Will Do With Estate Taxes for 2013 and Beyond?. To see the voting results, follow this link: Current Poll Results.