On the heels of the re-election of President Obama comes increased speculation that the 2009 federal estate tax rules will be reinstated. Why? Apparently because the 2009 estate tax rules are what President Obama has supported since he was Senator Obama and running for president in 2008 (in 2001, President Bush put in motion the gradual increase in the estate tax exemption and decrease in the estate tax rate that ended in 2009 with the then largest estate tax exemption ever - $3.5 million - and then lowest estate tax rate ever - 45%), and Obama's budget proposals as president have consistently included the 2009 rules. In fact, reinstatement of the 2009 rules is supported by the results of my Estate Tax Straw Poll, which has seen a significant up tick in votes for this scenario in recent weeks: Estate Tax Straw Poll - Current Results.
With all of that said, on December 17, 2010, President Obama signed the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act (TRUIRJCA for short) into law, which has resulted in the largest estate tax exemption ever - $5.12 million - and the lowest estate tax rate ever - 35%. So I have to ask those who believe that the federal estate tax rules will revert to the 2009 rules - being a lower $3.5 million estate tax exemption and higher 45% estate tax rate - the following questions:
- If President Obama was so hell bent on maintaining the status quo with the 2009 federal estate tax rules, why did he sign TRUIRJCA into law?
- With the balance of power unchanged in Washington after the election, and the fact that this summer Democrats tried to get the 2009 estate tax rules into the Senate's Middle Class Tax Cut Act and the House's Job Protection and Recession Prevention Act and failed on both fronts, why are the 2009 estate tax rules still being discussed?
Please share your thoughts in a comment so that I can understand why reinstatement of the 2009 estate tax rules is gaining ground on, or passing, votes for the other scenarios in my Estate Tax Straw Poll.