Repealing Estate Tax Not Good for Any of Us

Don't believe what you read elsewhere: Repealing the estate tax is not in your best interest.

Fewer than 2% of estates face the estate tax as the law stands now, and the 2001 tax law provides for increasingly generous exemptions. That is, the exemptions increase until 2010, when the estate tax will be repealed for one year only. The House of Representatives already voted to make that repeal permanent, but last week the Senate voted against a permanent repeal. This issue is far from dead -- it's just in stasis. And there's been a lot of congressional obfuscation about whom the estate tax affects and how much of a burden it really is. So before Congress takes another pass at the issue, let's work through some of the details.

Under the 2001 tax law, the estate tax will be gradually phased out until it's totally repealed in 2010. But the law has a "sunset" provision, meaning that unless Congress acts, virtually the entire 2001 tax law will be repealed on Jan. 1, 2011, and we go back to the way things were before -- estate tax and all.

Under the current scenario, the size of an estate that can avoid tax will rise to $3.5 million by 2009. That means anyone who dies in 2009 can leave up to $3.5 million to any heir completely tax-free. Bequests of any size can always be left tax-free to a spouse or charity. ...