On October 20, 2010, Ashlea Ebeling posted A 60% Estate Tax Rate Could Be Around The Corner on The Best Revenge – Forbes. Ebeling explains why, for some people, the top estate tax rate in 2011 is scheduled to be at 60%, not 55%:
So where does the 60% rate come in? A 5% federal surtax, in addition to the 55% rate, applies to estates with assets between $10 million and $17.184 million. The surtax (for estates that pay all of it) wipes out the benefit of both the lower marginal rates applicable to the first $3 million of an estate’s assets and the $1 million exemption. In other words, the surtax makes the effective rate 55% on the first $17.184 million of the estate—if your estate is that large or larger. Once the estate is over $17.184 million, the surtax disappears and the nominal top rate is 55% again. . . .
Why not get rid of the surtax, and just have transparency in the rate structure? “It’s a deliberate effort to confuse people, and it works,” says Leonard E. Burman, a professor at Syracuse University’s Maxwell School of Public Affairs.
The 5% estate tax surtax is often overlooked. Print Ebeling’s post (or bookmark it) and return to it often.