That said, this bill and all the indignation is much ado about nothing. Bush's compromise of 1-year repeal before expiry was really a donut hole "compromised bill" since other, more onerous taxes would kick in in its place:
Under current law, if someone inherits a $5 million estate in 2009, they would pay $675,000 in federal estate taxes, according to an analysis by Deloitte Tax. In 2010, they would pay no estate tax but the estate would be subject to a 15 percent capital gains tax. If they inherit the $5 million estate in 2011, they would pay $2,045,000 in estate taxes, according to the analysis. Under the House bill, they would pay $675,000 in estate taxes, regardless of which year the estate is inherited WASHINGTON (AP) - The House voted Thursday to permanently extend a 45 percent inheritance tax on estates larger than $3.5 million, canceling a one-year repeal of the tax set to begin next month.
If Republicans offered a bill or an amendment to repeal the estate tax without replacement taxes (i.e. passing estate tax-free due to double taxation, which would, likely, earn them the usual "protectors of the rich" rhetoric from Democrats) they would have a case. To vote "for" the status-quo Bush's phony 1-year exemption / "repeal" of estate tax is a show, just like the Democratic bill is also for show - that they "care about middle class".
If anything, this bill mildly improves on a weird and artificial 2010 estate-tax planning, but something like this should have been expected earlier than a month before expiry.
A tale. Told by an idiot, full of sound and fury, signifying nothing.
I think the analysis is wrong, but I can’t prove it.
When there is a tax on an amount “over a limit”, it generally applies to the amount over the limit.
It would be rare for a tax to be applied such that a person who inherited 3.5 million would actually end up with MORE money than a person who inherited 3.6 million.
Of course, the estate tax is mostly another jobs program for lawyers.