Estate tax debate heating up

Will Michael Jackson’s $500 million+ estate really end up paying 45% to the federal government via the estate tax? Quite possibly. The King of Pop’s death has put the estate tax back on the front burner. As we head toward the possible one-year disappearance of the estate tax in 2010, the debate rages on about how the estate tax will re-emerge in 2011. It remains to be seen whether Congress will act quickly come September to create a “one-year-patch” that would extend 2009 estate tax rates, which would prevent a huge chunk of estate tax revenues from going up in smoke during a one-year expiration.

Will this year’s $3.5 million exemption and 45% tax rate be made permanent? Will President Obama’s proposal to cap the tax rate at 45% and have the $3.5 million exemption be indexed to inflation be adopted? Will the exemption be raised to $5 million and the rate capped at 35% as proposed by Sens. Blanche Lincoln, D-Ark. and Jon Kyl, R-Ariz.? Will the scheduled 2011 exemption of $1 million and a 55% rate be made permanent? Will the “death tax” be abolished altogether under pressure from those who argue (loudly and usually on cable news channels) it is nothing more than double-taxation?