Obama Calls for Tax Hikes on Life Insurers

Other provisions of the proposed budget include:

• Estate tax would be turned back to the level that existed in 2009 of a $3.5 million exemption and a maximum tax of 45%. Currently, the exemption is $5 million and the maximum tax rate 35%.
• Similarly, generation-skipping transfers (or GSTs) made after Dec. 31, 2012, would be taxed at a maximum tax rate of 45% with a life-time exclu­sion of $3.5 million. Gifts made after Dec. 31, 2012, would be taxed at a maximum tax rate of 45 percent with a life-time exclusion of $1 million.
• As reflect­ed in the adjusted baseline, the portability of unused es­tate and gift exclusion amounts between spouses would be made permanent and would apply to anyone dying after December 31, 2012.
• Establishing a minimum term of 10 years for grantor retained annuity trusts.
• A special tax on financial institutions with assets of more than $50 billion. It is designed to raise approximately $60 billion over 10 years. The tax was proposed earlier in order to pay for losses associated with the Troubled Asset Relief Program, but opponents point out that the program is nearing solvency, and that for that reason is unlikely to be supported by Congress.

Despite such sweeping ambitions, however, analysts point out that the budget, as proposed, has virtually no chance of being enacted in law.

Ryan Schoen and Sam Leaman of Washington Analysis said most of the proposals are already contained in the budget for the current year, which did not gain traction in Congress.

“Such policies will not pass muster in the Republican-controlled House,” Schoen and Leaman said.

In fact, they added, “the President has made these proposals the last two years, and they have not gained traction on either side of the Hill, even in the Democratically controlled Congress in 2010.”