Congress Should Be Ashamed Of This Dishonest ‘Repeal’
Of all the legislation National Underwriter has covered over the years, we would be hard pressed to identify anything that is as intellectually dishonest as the so-called “repeal” of the estate tax.
Whether one supports or opposes complete repeal of the estate tax–and NU has readers on both sides of the issue–it is hard to see how anyone can be satisfied with the outcome of this debate.
What started out as a legitimate examination of a controversial feature of U.S. tax policy devolved into a crass political game in which members of Congress who support repeal found a way to claim credit for something they did not actually achieve.
The word “repeal” is contained in the estate tax provision of the $1.35 trillion tax relief bill, but the word is stripped of all substance. What remains is an illusion that some are rightly calling a “suspension” of the tax. It will leave many taxpayers in the dark about how to prepare for the future. Even worse, it could lead some to think they needn’t do any estate planning at all.
Whatever the weaknesses of the previous estate tax system, it at least provided some degree of predictability about the tax liabilities involved in passing on assets to ones heirs. But now that Congress has “fixed” the estate tax, there is a huge black hole about what those liabilities will be 10 years down the road.
It may be instructive to review how this situation came about. Repeal of the estate tax became a major issue when Republicans gained control of Congress in 1994. But with Bill Clinton, an opponent of estate tax repeal, in the White House at that time, it remained an issue to score political points with certain constituencies.
The situation changed dramatically with the election of President George W. Bush. If passed by Congress, repeal would be signed into law. Now, repeal’s proponents had to confront the revenue loss, a daunting prospect.