Future of the Federal Estate Tax

Tom Herman (WSJ): "Nobody knows what will happen [to the estate tax] . . . But there is a compelling reason to expect some action"

Tom Herman answers the pressing question: What Will Happen to the Federal Estate Tax? (Wall Street Journal, 11/7/2010).  Here is part of his answer: 

Q: In reading about what will happen to the Bush tax cuts in 2011, the federal estate tax is never mentioned, in my experience. Why so, and what should we expect?

—N.M., Santa Cruz, Calif.

A: The strange saga of the federal estate tax, dubbed the "death tax" by its foes, has drawn growing attention lately. Nobody knows what will happen -- even though the midterm elections now are history. But there is a chance that Congress finally will take action in coming weeks when lawmakers return for a lame-duck session.

Naturally, you can't rule out the possibility that Congress will do nothing. Gridlock seems like Washington's natural state these days. But there is a compelling reason to expect some action: If Congress does nothing, the nation will face a bizarre set of circumstances.

Tom Herman on the uncertain status of estate tax reform

On May 27, 2010, the Fiscal Times published Estate Tax Update: Congress Looks for a Compromise, by Tom Herman, a former reporter for The Wall Street Journal.

This article captures the uncertain status of estate tax reform:

There is near unanimity that Congress needs to act — preferably soon — but no one knows what will happen, or when. . . .

Some experts still think the most likely outcome would be bringing back last year’s law, known as “snapback,” and making it retroactive to Jan. 1, 2010. But lawyers at the ABA tax-section conference said odds are growing for a compromise that would raise the basic exemption level to as much as $5 million, and cut the top tax rate to somewhere between 35 percent and 45 percent. This could be done in one shot — or phased in over several years.

Herman provides a number of excellent quotes, including the following:

• Sen. Richard Durbin [D-IL], assistant majority leader: "We know we have to do something"
• Sen. Susan Collins [R-ME]: "I am shocked we’re in May and still haven’t acted"
• Ronald D. Aucutt, partner at the McGuireWoods: “We’ve reached the point that most of us thought was unimaginable.”

The article concludes with the following solution by one lawyer: “Every member of Congress must serve as an executor in 2010.” 

Tom Herman (WSJ): "most tax advisers said they expect Congress to approve stopgap, or patch, legislation"

In a December 13, 2009 Wall Street Journal article, titled The Future of the Estate Tax, Tom Herman answered a question regarding whether the estate tax is going to disappear.  Here is part of his response:

Yes, but don't expect that to happen. . . .

I attended a tax-planning conference recently in New York and every lawyer and accountant I spoke with agreed that Congress won't allow the estate tax to vanish next year.

Instead, most tax advisers said they expect Congress to approve stopgap, or patch, legislation that would extend the basic structure of current law at least until the end of 2010.