Can A 35% Estate Tax Really Be Considered relief?

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When the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was passed through Congress on December 16th and signed into law by the president the next day many people let out a sigh of relief. This measure extended the Bush era tax cuts that were scheduled to expire at the end of 2010 and reduced the Social Security payroll tax that Americans must pay in 2011 by almost a third. As expected, the bill also affected the estate tax, and the changes were positive.

Had this legislation not been passed the estate tax exclusion was going to be just $1 million in 2011 and the maximum rate of the tax was going to be 55%. As a result of the passage of this bill the maximum rate of the tax has been shaved down to 35% and the estate tax exclusion is now $5 million per person. These parameters are to stay in place through the 2012 calendar year, and as that deadline approaches there is no doubt that we will see more political wrangling around the subject.

The question we would like to raise here is whether or not a 35% federal levy on money that you've been able to hang on to after you've been taxed heavily all your life can truly be termed as "tax relief?" Yes it is a reduction and 35% is better than 55%, and the 45% that we saw in 2009, but it is still more than a third of your legacy. These resources were not taxable while you were living, but the incident of your death triggers a 35% tax. Those who call the estate tax "the death tax" are not merely being flippant; it truly is a tax that is levied because you died and for no other reason.

The estate tax bite was reduced ever so slightly as a result of the tax bill that was passed in December, but as long as there is a 35% death tax in place the burden will be far too heavy for those who are shouldering the load due to their hard work, success and death...none of which fit the classic definition of a taxable event under the Internal Revenue Code.

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To learn more about estate taxes and protect you from the cost of long term care, please visit the website of the experienced estate planning attorneys Oklahoma City OK of the Parman and Easterday today.



Article Originally Published On: http://www.articlesnatch.com


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